Nigeria faces the prospect of widespread blackouts as power generation companies (GenCos) threaten to shut down operations due to over N4 trillion in unpaid debts from the federal government and other market operators. Retired Colonel Sani Bello, Chairman of the Board of Trustees of the GenCos, voiced these concerns to journalists in Abuja on Monday, highlighting the dire financial strain crippling the companies' ability to function.
GenCos lament that they are providing electricity without receiving adequate payment, warning that this situation has severe consequences for them and the entire power value chain. Of the total debt, N2 trillion is for electricity generated in 2024, while N1.9 trillion represents legacy debts.
According to Bello, the N900 billion allocated for the power sector in the 2025 national budget is grossly insufficient to cover existing arrears and ensure future payments. He described the current payment situation as "a clear departure from existing terms of the Power Purchase Agreement," noting that GenCos receive only about 9–11% of their invoices, while regulatory bodies and other service providers are fully compensated.
The GenCos also point to a sharp decline in collection rates, which fell below 30% in 2024, exacerbating their liquidity crisis. Bello stated that "The crises from cash liquidity are on the top burner and have reduced GenCos’ ability to continue to perform their obligations."
Operational costs, which are denominated in U.S. dollars, and limited access to foreign exchange further compound the problem. Bello emphasized the necessity of "a specialised window or stable dollar allocation option for the GenCos."
The GenCos are demanding immediate government action, including the full settlement of outstanding invoices, a reprioritization of the waterfall payment structure, and guarantees backed by institutions such as the World Bank and the African Development Bank (AfDB). "There is a need for a coordinated approach by all stakeholders to address the liquidity issue realistically and sustainably. This request requires urgent attention," Bello added.
As of the time of reporting, Minister of Power Adebayo Adelabu has not responded to the matter. The potential shutdown of power generation could plunge Nigeria into darkness, impacting homes, businesses, and essential services across the country.