Power crisis deepens as GenCos battle N6.8 trillion debt, shut down plants

Nigeria’s power generation companies (GenCos) are grappling with a mounting N6.8 trillion debt, forcing several plants to shut down and crippling the sector’s ability to maintain equipment, secure gas supplies, and cover basic operational costs.

Joy Ogaji, CEO of the Association of Power Generation Companies (APGC), said, “We cannot maintain the machines. Without adequate funding, equipment cannot be serviced,” highlighting the severity of the liquidity crisis confronting the industry.

Industry data shows the debt has been accumulating since 2015, growing by roughly N200 billion monthly. Gas-fired plants, which account for nearly 70% of the nation’s electricity generation, are particularly affected as suppliers demand payment assurances before continuing deliveries.

Operational performance remains weak.

The Nigerian Independent System Operator (NISO) reported that 16 of 33 power plants were offline as of Tuesday afternoon, while the remaining plants generated a combined 3,705 megawatts—well below national demand. Only slightly over half of Nigeria’s population is connected to the national grid, and even connected consumers face frequent outages.

Some GenCos have resorted to bank loans or personal collateral from owners to sustain operations, while others struggle to meet salary obligations. Rising operational costs and unpaid invoices continue to exacerbate financial stress.

The Federal Government has launched a plan to raise N4 trillion from domestic capital markets to partially settle outstanding debts, though only a fraction has been raised so far. Industry stakeholders have welcomed the initiative, but concerns linger over its pace and sufficiency to halt debt accumulation.

The APGC remains cautious, noting that while the bond strategy could provide relief, the sector’s long-term stability depends on sustainable funding and efficient payment mechanisms.