Nigeria’s electricity generation companies (GenCos) have raised the alarm over the growing debt burden in the power sector, demanding a firm date to meet with President Bola Tinubu over the staggering ₦4.7 trillion owed to them and other stakeholders. The companies warned that failure to urgently address the financial crisis could lead to a nationwide power collapse.
According to the GenCos, the debt includes ₦2 trillion in legacy obligations and ₦1.9 trillion in unpaid subsidies for the year 2024. In addition, electricity distribution companies (DisCos) are reportedly owed about ₦450 billion within the same period.
The GenCos lamented that under the current payment structure known as the “waterfall arrangement,” only 9 to 11 percent of their monthly invoices are settled by the Nigerian Bulk Electricity Trading (NBET) company, leaving the rest unpaid. This, they say, has left them unable to meet critical operational expenses including gas supply, equipment maintenance, and staff salaries.
“The continued neglect of the GenCos’ financial plight undermines the stability of the entire power sector,” a senior executive of a major GenCo told The Punch. “We are now demanding a formal meeting with President Tinubu to urgently chart a sustainable solution.”
In May 2024, President Tinubu approved a plan to settle ₦3.3 trillion of the outstanding power sector debt. This includes ₦1.3 trillion owed to the GenCos, to be paid through a combination of cash disbursements and promissory notes over a two- to five-year period.
However, the GenCos have expressed dissatisfaction with the pace and lack of clarity in the implementation of the repayment plan. They are now demanding the immediate execution of the payment framework, a reordering of the waterfall payment arrangement to give priority to GenCos, and payment security mechanisms backed by international financial institutions such as the World Bank or the African Development Bank.
Industry experts warn that failure to act swiftly could plunge the sector into deeper crisis, with dire consequences for national security, economic growth, and the welfare of Nigerians.
“The power sector cannot survive on promises alone. Without immediate financial intervention, GenCos will be forced to shut down operations, which will lead to widespread blackouts,” the Association of Power Generation Companies (APGC) said in a statement.
The situation underscores the urgent need for comprehensive reforms and financial discipline within the electricity value chain.
SOURCE: Punch