By Andrew Haruna
April 15, 2025 | Abuja, Nigeria
Nigeria’s energy sector is facing a looming catastrophe as power generation companies (GenCos) warn of a total shutdown of electricity plants nationwide due to a mounting debt crisis that now exceeds ₦4 trillion.
The alarming situation was made public on Monday by Colonel Sani Bello, Chairman of the Board of Trustees of the Association of Power Generation Companies (APGC), who revealed that the Federal Government owes GenCos ₦2 trillion for power supplied in 2024 and ₦1.9 trillion in legacy debt.
According to industry insiders, the GenCos receive less than 30% of their monthly invoices for electricity dispatched to the national grid, creating an unsustainable financial burden that threatens Nigeria’s entire electricity supply chain.
“The liquidity crisis within Nigeria’s electricity market is spiraling out of control,” said Bello. “We are dealing with a situation where energy producers can no longer meet their financial obligations due to delayed payments, lack of structured debt recovery, and the absence of securitized power purchase agreements.”
The GenCos warned that the unresolved cash flow crisis could cause widespread blackouts, collapse the national grid, and disrupt energy infrastructure investments critical to the country’s development.
Mounting Pressure on Grid Infrastructure and Energy Financing
The APGC noted that despite consistently supplying power to the national grid, no comprehensive payment structure has been implemented—even with the Partial Activation of Contracts in place since July 2022.
“In 2024, payment recovery fell below 30%, and early figures from 2025 show no improvement,” the statement said. “This threatens not just power generation but national security, economic growth, and investor confidence in Nigeria’s energy infrastructure.”
The power generation sector is also being battered by high regulatory fees, multiple corporate taxes, and foreign exchange instability, all of which are eroding the operational capacity of GenCos.
Budget Allocation Insufficient to Prevent Collapse
Despite the gravity of the crisis, GenCos lamented that the ₦900 billion earmarked for the power sector in the 2025 budget is grossly inadequate to offset current liabilities and fund future electricity supply projects.
“The electricity sector’s funding gap must be closed immediately through structured payment solutions, including infrastructure financing, financial instruments, or debt-for-equity swaps,” the APGC recommended.
Industry experts say the lack of liquidity in Nigeria’s power market is deterring energy investment, delaying upgrades to grid infrastructure, and keeping electricity access unreliable for millions of Nigerians.
The GenCos are calling for an urgent government funding intervention to avoid a total shutdown, which could paralyze businesses, disrupt commerce, and worsen the country’s economic woes.
“The time to act is now. Without immediate and strategic financial intervention, Nigeria risks total grid failure,” the APGC concluded.