Amanze Chinonye
The Federal Government and electricity generation companies (GenCos) are locked in a dispute over the reconciliation of debts in Nigeria’s power sector, with both sides presenting conflicting figures on the actual liabilities owed to operators, Prime Business Africa reports.
The Minister of Power, Adebayo Adelabu, said the government’s obligations to GenCos could settle at about ₦4 trillion after reconciliation, significantly lower than the ₦6.3 trillion figure widely cited within industry circles.
Adelabu disclosed this during a press conference in Abuja, where he also apologised to Nigerians over persistent power outages, attributing the situation to a mix of structural and financial challenges in the sector.
Join our WhatsApp Channel“You asked how much we owe suppliers. I can tell you that the amount we owe GenCos is estimated and is still being reconciled,” he said. “When we said ₦4tn as at the end of 2024, it was audited and agreed at about ₦2.8tn because of the interest elements and the foreign exchange components embedded in it.
“A number of the GenCos have agreed, while some are still discussing back and forth. But now that we are talking about ₦6tn for the generating companies, by the time reconciliation is concluded, it will probably be around ₦4tn total.”
The minister further revealed that a significant portion of the liabilities no less than 60 per cent is linked to gas supply, underscoring the central role of gas-fired plants in Nigeria’s electricity generation.
However, GenCos have rejected the government’s position, insisting that any reconciliation must be transparent and jointly conducted by all stakeholders.
Reacting, the Executive Secretary of the Association of Power Generation Companies, Joy Ogaji, questioned the basis of the government’s figures and called for clarity on how the estimates were derived.
She said the last comprehensive reconciliation involving all parties was held in March 2025 and that no subsequent exercise had taken place.
“We are talking about a bilateral agreement, which means reconciliation of figures should be done by all parties,” Ogaji said. “We want the government to publish how they arrived at their figures and what components formed them.”
Ogaji also raised concerns over reliance on the Nigerian Bulk Electricity Trading Plc as a primary data source, noting that invoice settlement involves multiple market participants beyond the agency.
According to her, GenCos’ claims are rooted in contractual obligations and cover a wide range of cost components often overlooked in public discourse.
These include unpaid invoices for electricity generated since 2015, capacity payments, deemed capacity, foreign exchange differentials, and supplementary charges arising from frequent plant start-ups and shutdowns.
Other components, she said, include interest on outstanding payments pegged at NIBOR plus four per cent, Value Added Tax on gas supplied between 2013 and 2021, and losses linked to low plant utilisation caused by gas shortages and transmission constraints.
She added that operators also incur additional costs from providing ancillary services such as spinning reserve and black start capabilities, as well as operating in Free Governor Mode, conditions that impose extra wear on equipment without corresponding compensation.
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The disagreement comes amid broader efforts by the Federal Government to sanitise the electricity market and address longstanding liquidity challenges.
It follows earlier indications that President Tinubu approved ₦2.8 trillion as the verified portion of legacy debts owed to GenCos, based on an audit of subsidy obligations accumulated over the years.
A senior government official familiar with the process said the approved amount reflects validated claims, adding that further reconciliation is ongoing to address outstanding components.
“The audit has shown that ₦2.8tn is the verified liability, and that has been approved. The reconciliation process will continue to address other components of the claims,” the source said.
The dispute highlights a widening trust gap between the government and operators, raising concerns over transparency and the long-term sustainability of the electricity market.
Meanwhile, gas constraints continue to hamper electricity generation nationwide, with inadequate supply limiting GenCos’ ability to operate at optimal capacity and contributing to persistent power shortages.
Analysts warn that unless the reconciliation process is conclusively resolved and liquidity improves, the sector may face heightened risks, including reduced generation output, investor uncertainty, and continued instability in electricity supply.
Despite ongoing reforms, Nigeria’s power sector continues to grapple with legacy debts, tariff shortfalls, and operational inefficiencies, challenges that have hindered efforts to achieve stable and reliable electricity supply.
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.
