Power Generation Companies (GenCos) have threatened to shut down operations over a N4 trillion debt owed by the federal government, raising fears of a nationwide blackout.

In a statement by Sani Bello, a retired colonel and Chairman of the Board of Trustees of the GenCos, the companies cited severe liquidity challenges in Nigeria’s electricity sector, worsened by unpaid invoices, lack of firm contracts, and an unstable market structure.

Mounting Financial Strain

GenCos stated that despite expanding operations, they have been sidelined in payment settlements, forcing them to bear the brunt of the sector’s cash crisis. The situation has been compounded by:

- Unpaid invoices totaling N4 trillion (N2 trillion for 2024 and N1.9 trillion in legacy debts).

- Low revenue collection in 2024 (below 30%), with 2025 projections looking equally bleak.

- High operational costs, including forex scarcity, corporate taxes, concession fees, and regulatory compliance burdens.

The companies also expressed disappointment over stalled financial interventions, such as the World Bank’s Power Sector Recovery Programme (PSRP), due to other market players failing to meet key performance targets.

Calls for Immediate Action

GenCos demanded:

1. Urgent payment plans to clear outstanding debts.

2. Priority payment under the sector’s waterfall structure to ensure full settlement of their invoices.

3. A sustainable financing plan to address market shortfalls and stabilize the sector.

Sector-Wide Crisis Deepens

Nigeria’s power sector is grappling with massive debts from the government, consumers, and distribution companies (DisCos). GenCos also lose 35% of revenue due to technical and commercial inefficiencies, leading to underpayment to gas and hydro plants, which supply 85% and 25% of the nation’s electricity, respectively.

An industry expert warned that if GenCos proceed with a shutdown, the country could face total darkness. “The government only pays 40% of invoices—no business can survive that,” the source said, urging urgent negotiations.

Government Response

The Minister of Power’s office acknowledged the debt, attributing it partly to subsidy obligations and legacy debts predating the current administration.

“The Minister is engaging the Finance Ministry to expedite payments,” said Bolaji Tunji, Special Adviser on Media. “We recognize the severity of this issue and are working to resolve it.”