Electricity blackout looms as NMDPRA halts gas supply to GenCos over N2 trillion debt

• Nigeria risks a nationwide electricity blackout as NMDPRA halts gas supply to indebted power generation companies (GenCos)
• The gas producers are owed over N2 trillion by the Federal Government and GenCos, hindering their operations
• GenCos warn that unresolved debts could threaten the continuity of electricity generation in the country

Nigeria faces a looming electricity blackout following a directive by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) instructing gas producers to halt gas supply to indebted power generation companies (GenCos).

In a post shared on Wednesday, December 11, via its official X (formerly Twitter) account, the Nigeria National Grid disclosed that the directive stems from the Federal Government and some GenCos' failure to pay over N2 trillion in legacy debts owed to gas producers.

“An electricity blackout is imminent following the Nigerian Midstream and Downstream Petroleum Regulatory Authority’s directive to gas producers to cease supplying gas to indebted generation companies (GenCos). 

“NMDPRA stated that the substantial debts owed to producers had hindered their ability to sustain operations. It called on gas off-takers, particularly power generation companies, to ensure timely payment for the gas supplied. 

“The federal government and some GenCos currently owe over N2 trillion in legacy debts to gas producers in Nigeria,” the tweet read.

NMDPRA stated that these unpaid debts have severely impacted gas producers' ability to maintain operations, calling on gas off-takers, particularly GenCos, to ensure timely payment for gas supplies.

Despite various government interventions, Nigeria's power sector remains beset by underinvestment and liquidity challenges. 

In recent months, the Federal Government has taken steps to address the debt crisis. In August 2024, the Minister of Power, Adebayo Adelabu, announced a payment of N205 billion to settle part of the N1.3 trillion owed to GenCos. 

Earlier in May, the government allocated N130 billion to settle gas supply debts in the Nigerian Electricity Supply Industry (NESI).

While these payments represent progress, they fall short of resolving the over N2 trillion in outstanding debts. 

In June, GenCos warned that failure to address these debts could jeopardise Nigeria's electricity generation.

NMDPRA has reiterated its appeal for power generation companies to prioritise timely payment for gas supplies to sustain operations and ensure uninterrupted electricity for Nigerians.

The ongoing debt crisis highlights the need for more significant reforms and investment in Nigeria's power sector. As the government continues its debt settlement efforts, stakeholders in the industry must address structural inefficiencies to stabilise and improve electricity supply across the country.

Nigerian government targets $10b to achieve stable power supply to citizens

Meanwhile, TheRadar earlier reported that the Federal Government is banking on the Public-Private Partnership (PPP) arrangement to bridge the investment gap in the power sector.

The Minister of Power, Adebayo Adelabu, who said that the government would need $10 billion to provide uninterrupted power, described the challenges in the power sector as enormous, including attacks by vandals of transmission facilities and other infrastructure.