- Power generation companies threatened to shut down electricity supply over N4 trillion debt
- They said lack of liquidity in the sector constrains the operations of GenCos and is pushing the sector toward total collapse
- The GenCos lamented the non-prioritisation of debt repayment and absence of a clear-cut financing plan by the Federal Government
Power generation companies (GenCos) in Nigeria have threatened to shut down electricity supply over outstanding debts that have exceeded N4 trillion.
The companies, under the aegis of the Association of Power Generation Companies (APGC), issued the threat in a statement titled, ‘Over N4 trillion Unpaid Invoices Threaten GenCos Imminent Shutdown,’ issued on Monday, April 14, and signed by the Chairman of the Board of Trustees, Colonel Sani Bello (retd.).
The GenCos noted that the debt burden, comprising N2 trillion for power supplied in 2024 and N1.9 trillion in legacy debts, and operational constraints could lead to an imminent shutdown of power plants if urgent interventions were not made.
The companies said plants were being paid less than 30 per cent of monthly invoices for power supplied to the national grid, warning that the continued practice was pushing the Nigerian power sector toward total collapse.
“The power generation companies are constrained to issue this press release to draw the attention of the Federal Government and key stakeholders to the need to urgently address the issue of inadequate payment for electricity generated by them and consumed on the national grid, which is currently threatening the continued operation of their power generation plants.
“Against the backdrop of the many challenges facing the power sector in Nigeria, the crises from cash liquidity are on the top burner and have reduced GenCos ability to continue to perform their obligations, thereby threatening to completely undermine the electricity value chain.
“In the light of the severity of the issues highlighted above, the GenCos are requesting that immediate and expedited action is taken to prevent national security challenges that may result from the failure of the GenCos to sustain steady generation of electricity for Nigerians,” the statement read.
GenCos lament FG’s non-prioritisation of debt repayment
The statement further lamented the non-prioritisation of debts owed GenCos by the Federal Government, unlike other service providers in the Nigerian Electric Supply Industry (NESI).
It also cited the allocation of only N900 billion to the power sector in the 2025 budget, saying it raises concerns about its adequacy to cover arrears and future payments.
The GenCos noted that the government has not shown a clear-cut financing plan for the power sector, amid other challenges bedeviling it, such as system constraints and unfriendly policies and regulations.
“The power generated by GenCos have continued to be consumed in full without corresponding full payment, notwithstanding the commencement of the Partial Activation of Contracts in the NESI which took effect from July 1, 2022, the minimum remittance order, bilateral market declaration, waterfall arrangement, the risks of inflation, forex volatility with no dedicated window to cushion the effect of the forex impact, the supplementary MYTO order which leaves about 90 percent of GenCos monthly invoices unmet without a bankable securitisation or financing plan.
“GenCos’ liquidity challenges are further worsened by the various policies introduced such as the payment waterfall in the NESI, which deprioritises payment to GenCos as service providers such as MO/NISO, NERC and NBET /leaders all receive 100 percent payment of their market invoices starting from May 2019. As a result of this, no one is under pressure to ensure GenCos invoices are fully settled.
“The implication of this is that GenCos only get paid a portion of their invoices (nine per cent, 11 per cent) from whatever amount is left.
“This is an aberration as it is a clear departure from existing terms of the Power Purchase Agreement (PPA) guiding the contractual relationship between GenCos and the Nigeria Bulk Electricity Trading Plc (NBET), by which NBET as buyer has contracted to purchase the available capacity as agreed under the PPA,” the statement added.
FG’s N4 trillion debt to GenCos, DisCos hinders power sector performance – Minister
Meanwhile, TheRadar earlier reported that the Minister of Power, Adebayo Adelabu, said the Federal Government’s N4 trillion debt owed electricity generation companies (GenCos) and electricity distribution companies (DisCos) hinders the optimal performance of the power sector.
Adelabu stated this at the ongoing public presentation of the National Integrated Electricity Policy and Nigeria Integrated Resource Plan, in Abuja, on Thursday, February 27.
