The power generation firms, represented by the Association of Power Generation Companies, issued a warning in a statement titled ‘Unpaid Invoices Exceeding N4 Trillion Threaten GenCos.’ This statement, released on Monday, was signed by the Chairman of the Board of Trustees, Col. Sani Bello (retd.).
He said, “The Power Generation Companies (‘GenCos”) 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 light of the severity of the issues highlighted above, the GenCos are requesting that immediate and expedited action be taken to prevent national security challenges that may result from the failure of the GenCos to sustain steady generation of electricity for Nigerians.
“The 2024 collection rate has dropped below 30 per cent, and 2025 is not any better, severely affecting GenCos’ ability to meet financial obligations. Tax and Regulatory Challenges: High corporate income tax, concession fees, royalty charges, and new FRC compliance obligations are further straining GenCos’ revenue. GenCos are currently owed about N4 trillion (N2 trillion for 2024 and N1.9 trillion in legacy debts). No possible solutions, including cash payments, financial instruments, and debt swaps, are in sight.
“The 2025 government budget allocates only N900 billion, raising concerns about its adequacy to cover arrears and future payments. The power generated by GenCos has 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; or the supplementary MYTO order, which leaves about 90 per cent of GenCos monthly invoices unmet without a bankable securitisation or financing plan. This situation has dire consequences for the GenCos and, by extension, the entire power value chain”.
The Minister of Power has committed to resolving the N4 trillion electricity debt owed to the generating companies, following threats from the electricity distribution companies to initiate a shutdown on Monday.
Regarding the situation, Bolaji Tunji, who is the special adviser to the Power Minister, mentioned that the government is cognizant of the ongoing issue and is actively taking significant measures to address and resolve it.
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He said, “We are not unaware of this debt arising from the FG’s commitment on subsidy. Part of the debts are legacy debts, which were on the ground before the Minister of Power assumed office.
“The Minister of Power has repeatedly harped on this, knowing the implication of such debts to the operations of the various power sector stakeholders, especially the GENCOs. The Minister of Power is very much concerned.
“The issue is being discussed with the Ministry of Finance, making a case for how the debt must be paid. We expect the Ministry of Finance to take action on this soon.”
