Amanze Chinonye
A growing number of Nigeria’s power generation companies (GenCos) have shut down or scaled back operations under the weight of a mounting N6.8 trillion debt burden, intensifying electricity shortages nationwide, Prime Business Africa reports.
The development, reported by Bloomberg, underscores deepening liquidity challenges across the power sector, with operators struggling to maintain infrastructure, secure gas supplies, and meet basic operational expenses.
The Chief Executive Officer of the Association of Power Generation Companies (APGC), Joy Ogaji, described the situation as critical, warning that inadequate funding has made it increasingly difficult for GenCos to sustain operations.
Join our WhatsApp Channel“We cannot maintain the machines,” she said, highlighting the severity of the cash flow crisis confronting the sector.
Mounting Debt, Liquidity Strain
Industry figures show that GenCos were owed about N6.8 trillion as of the end of February, with the debt accumulating since 2015 and increasing by roughly N200 billion monthly.
The imbalance has cascaded across the energy value chain, as GenCos reportedly owe gas suppliers and transport service providers about 60 per cent of the amounts owed to them. This has heightened pressure on supply continuity.
Gas-fired plants account for nearly 70 per cent of Nigeria’s electricity generation, making consistent gas supply critical. However, suppliers are increasingly unwilling to continue deliveries without payment assurances, worsening the generation outlook.
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Generation Declines as Plants Go Offline
Data from the Nigerian Independent System Operator (NISO) indicate significant underperformance in electricity generation.
As of Tuesday afternoon, 16 out of 33 power plants were not supplying electricity, while the remaining facilities generated a combined 3,705 megawatts. National output has hovered around 4,000 megawatts for years well below demand levels.
Despite an installed capacity of about 14,000 megawatts, persistent constraints have left much of the capacity untapped. Access to electricity remains limited, with only slightly more than half of the population connected to the grid and frequent outages affecting those with access.
Funding Plans
The Federal Government has announced plans to raise N4 trillion through domestic bond issuances to partially settle outstanding debts owed to power companies, targeting liabilities accumulated since 2015.
While the proposal has been welcomed by stakeholders, concerns remain about the pace of implementation and whether it will be sufficient to stem the rising debt burden.
Earlier efforts, including a government-backed bond programme introduced in October 2025, have faced criticism over a perceived debt-for-debt approach. GenCos have also rejected claims that N2.8 trillion represents a final settlement figure, describing such assertions as misleading.
Analysts warn that without sustained financial reforms and improved liquidity across the electricity value chain, the ongoing crisis could deepen, further undermining power supply and economic activity.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
