FG’s Debt To Power Sector May Hit ₦6tn By December—GenCos

…Says Only 36% Of N280bn Monthly Power Sector Debt Paid

Nigeria’s electricity market is facing a deepening financial crisis as the Federal Government’s indebtedness to power generation companies (GenCos) is projected to surpass ₦6tn by December 2025, raising fears about the sustainability of electricity supply across the country.

The grim outlook was revealed by the Executive Secretary of the Association of Power Generation Companies (APGC), Dr. Joy Ogaji, who painted a troubling picture of the widening liquidity shortfall in the sector.

According to her, the Federal Government, through the Nigerian Bulk Electricity Trading Company (NBET), receives monthly invoices of about ₦280bn from the GenCos for power supplied to the national grid.

However, only 35 percent to 36 percent of these invoices are typically paid, leaving a balance of 64 percent to 65 percent unpaid every month.

She said, “On the average, the sector is owed nearly ₦200bn monthly. If you calculate that from January to August 2025, that is already about ₦1.6tn in fresh unpaid bills. When added to the outstanding balance, by August ending alone, the government’s indebtedness to GenCos had risen to ₦5.6tn,” Ogaji disclosed.

She warned that if the current trend continues, the debt will cross the ₦6tn mark by December 2025, compounding the long-standing financial distress in the power value chain.

She said,”The invoice, they are invoicing embezzled, so every N100, the gas suppliers have N60 Naira or 70 Naira as the case may be. The ₦6tn or the ₦4tn that is being designed is not only Genco’s money, so we also want to inform the government that while the design for a ₦4tn bond is in place, we should take into cognizance the fact that we also have creditors that are waiting for their money,” she warned.

She added, “Our research shows that from the DMO office, what has been budgeted for 2025 is just ₦800bn. Remember I said every month we are invoicing ₦280bn per month.

“If the DMO has only marked ₦800bn for this year, then telling us that you will pay our debt through promissory notes is not tenable at all. Because oblibn, one, promissory note, as you all may know, it is designed for all government creditors, not just Gencos. Let’s also just for purposes of the discussion assume that the ₦800bn is designed specifically for Gencos — that is not enough.”

The power sector, privatized in 2013 with the hope of attracting private investment and improving efficiency, has remained stuck in a cycle of underfunding and systemic inefficiencies.

While distribution companies (DisCos) collect tariffs from consumers, they often remit less than what is required to settle their obligations to NBET, which in turn owes the GenCos.

This shortfall has left the GenCos heavily underfunded, forcing them to grapple with rising costs of gas supply, plant maintenance, and expansion projects.

The inability to recover costs fully has also limited investments in new generation capacity, further frustrating government efforts to achieve reliable electricity supply.

“Generation companies need liquidity to continue operating, pay their gas suppliers, and maintain their plants. When debts keep piling up without settlement, the entire chain suffers, and ultimately, Nigerians experience unreliable power supply,” Ogaji stressed.

Nigeria currently generates between 4,000 and 5,000 megawatts of electricity daily for a population of over 200 million people which is far below demand.

The sector’s woes have been compounded by gas supply disruptions, obsolete transmission infrastructure, and an inadequate tariff regime.

Industry analysts argue that the debt overhang to GenCos underscores the need for urgent reforms. Without prompt payments, gas producers who fuel most of Nigeria’s thermal power plants may cut supply, further worsening power outages.

President Bola Tinubu’s administration had repeatedly promised to stabilize the power sector as part of its economic reform agenda. In July 2025, the President announced plans to clear part of the outstanding debts owed to GenCos and gas suppliers, assuring stakeholders that reforms were underway to restore investor confidence.

Ogaji expressed optimism that the Federal Government would keep its word. “We believe that progress will be made on this matter, and hopefully the promises made by the President will be fulfilled,” she said.

The Minister of Power, Adebayo Adelabu had in April this year said the government plans to pay Power Generation Companies (GenCos) N2tn out of the ebt owed them before the end of 2025.

Adelabu was reacting to an appeal by the GenCos urging the Federal Government and stakeholders in the power sector to settle the outstanding debts owed them for electricity generated.

Then, the government was owing about N4tn
“I can tell you that between now and the end of the year, we are going to pay close to N2tn out of the N4tn owed GenCos.

“These debts are primarily unpaid subsidies, almost half of it was inherited, while about half of came from 2024 operations

“There are plans underway to make these payments. I will not say it will be paid 100 per cent; we will be paying it gradually, ‘’ he said.

Adelabu had said that the mode of payment would be in two ways, adding that there would be some budgetary provisions which will facilitate cash payments.

He said that government was also discussing with the GenCos to give them some guaranteed debt instruments like promissory notes.

“These promissory notes will be liquid enough for it to be taken to the banks for discounting if they need immediate cash injection.

FG’s Debt To Power Sector May Hit ₦6tn By December—GenCos is first published on The Whistler Newspaper