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, ENigeria Newspaper has learnt.
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.
Recall that ENigeria Newspaper reported that 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.
The fundamental cause of this problem is a discrepancy between the quantity of money received from customers through tariffs and the cost of manufacturing. Because the distribution companies’ inefficiencies in metering, billing, and collections compounded the funding gap, these tariffs did not accurately reflect the costs associated with power generation.
The government used subsidies to cover some of the expenditures through Nigerian Bulk Electricity Trading (NBET) Plc in order to safeguard the customers; as a result, legacy debts were created.
The results indicate that these obligations include capacity payment, presumed capacity payment, foreign exchange differential, interest on arrears, and gas payment in addition to the cost of unpaid invoices.
Thermal power companies that consume gas from different sources are responsible for about 75% of the overall debt. There is an energy crisis across the country as a result of numerous gas providers having to cut back on their supplies due to mounting debt.
The Federal Government insists that paying off the loans will enhance cash flow throughout the value chain, allowing electricity plants to run more effectively and lowering outages, despite the worries.
Additionally, there are concerns about whether the plan would be sufficient to restore market confidence and if the monies would be disbursed in cash or through financial instruments.
Although the N3.3 trillion plan demonstrates the nation’s readiness to address the issue, critics point out that Nigeria’s electrical problem will continue in the absence of additional action.
