Power generation companies (GenCos) have pushed back against the Federal Government’s newly approved N3.3 trillion plan to clear debts in Nigeria’s electricity sector, insisting that the actual liabilities are significantly higher—closer to N4 trillion.
The dispute comes just as the government announced what it described as a major intervention aimed at stabilising the country’s struggling power value chain by settling long-standing obligations owed to industry players.
The FG say the plan followed a “final review” of legacy debts accumulated over several years, with the intervention expected to improve liquidity, restore investor confidence, and boost electricity supply nationwide.
While authorities have verified N3.3 trillion in obligations, GenCos maintain that total outstanding debt is closer to N4 trillion, including about N2 trillion in accumulated arrears and another N2 trillion in unpaid subsidies for 2024 alone.
Executive Secretary of the Association of Power Generation Companies (APGC), Dr Joy Ogaji, criticised the verification process, describing it as lacking transparency and excluding key stakeholders.
“We are not aware of any such verification outside the last reconciliation concluded in March 2025,” she said.
Ogaji also raised concerns over how the government intends to settle the debt and whether the announcement would translate into actual payments.
“That is, if the announcement is cash-backed and not merely a political pronouncement. We have not seen any money,” she added.
This conflict raises further issues relating to Nigeria’s power sector, where there has been a prevailing liquidity challenge since its privatization in 2013.
At the root of this issue is an inherent disconnect between the cost of production and the amount of money that is collected from customers through tariffs. These tariffs were not reflective of the costs incurred during power generation, as inefficiencies in metering, billing, and collections by the distribution companies increased the funding deficit.
In order to protect the customers, the government, through the Nigerian Bulk Electricity Trading (NBET) Plc, covered some of the costs using subsidies and as such, generated the legacy debts.
These debts do not only pertain to the cost of unpaid bills but are inclusive of capacity payment, deemed capacity payment, foreign exchange differential, interest on arrears, and gas payment.
The majority of the total amount of debt, roughly 75 percent, is owed by thermal power producers who use gas from various sources. Owing to growing debts, many gas companies have had to reduce their supply, resulting in an energy crisis throughout the nation.
Despite the concerns, the Federal Government maintains that clearing the debts will improve cash flow across the value chain, enabling power plants to operate more efficiently and reducing outages.
There are also some issues regarding the modality of disbursing the funds, either in cash or via financial instruments, and whether the strategy would be enough to bring back investor confidence.
For the time being, although the plan of N3.3 trillion shows the country’s readiness to solve the problem, observers note that without further steps, the issue of electricity in Nigeria will persist.
