By Deborah Nnamdi
Nigeria’s 23 power generation companies have warned that they can no longer ensure a stable electricity supply due to a deepening liquidity crisis in the electricity market, with outstanding debts now surpassing N4 trillion.
In a statement released on Monday and signed by Col. Sani Bello (retd.), Chairman of the Board of Trustees of the Association of Power Generation Companies, the firms raised serious concerns about the growing financial strain. They cautioned that without urgent intervention, ongoing operational challenges and the mounting debt could lead to the shutdown of power plants.
The companies stated that the persistent non-payment for electricity generated and supplied to the national grid is pushing the Nigerian power sector toward potential collapse.
The statement, titled ‘Over N4tn Unpaid Invoices Threaten GenCos’ Imminent Shutdown’, criticized the Federal Government for failing to provide a clear financing strategy. It also highlighted the increasing financial and operational difficulties facing the Nigerian Electricity Supply Industry (NESI).
Furthermore, GenCos accused the Nigerian Bulk Electricity Trading Plc and other key stakeholders of marginalizing them in the implementation of the NESI “waterfall arrangement.” While other service providers reportedly receive full payments, the GenCos claim they are paid as little as 9 to 11 percent of what they are owed.
The statement read, “The Power Generation Companies (“GenCos”) are constrained to issue this press release to draw the attention of the Federal Government and key stakeholders to the need to urgently address the issue of inadequate payment for electricity generated by them and consumed on the national grid, which is currently threatening the continued operation of their power generation plants.
“Against the backdrop of the many challenges facing the power sector in Nigeria, the crises from cash liquidity are on the top burner and have reduced GenCos’ ability to continue to perform their obligations, thereby threatening to completely undermine the Electricity value chain.
“In the light of the severity of the issues highlighted above, the GenCos are requesting that immediate and expedited action be taken to prevent national security challenges that may result from the failure of the GenCos to sustain steady generation of electricity for Nigerians.”
Recall that in February, the Minister of Power, Adebayo Adelabu, disclosed that the government owes electricity generation companies and electricity distribution companies over N4 trillion in electricity subsidies.
Giving a breakdown, the minister said N2 trillion is owed to GenCos as legacy debt, while another N1.9 trillion is owed to them as part of the electricity subsidy for 2024, while DisCos are owed N450 billion for the 2024 electricity subsidy.
