Nigeria’s electricity industry is facing deepening financial strain as Electricity Generation Companies (GenCos) reveal that total sector debt has climbed to N6.5 trillion, with projections indicating it could rise to N8.8 trillion before the end of 2026.
In a memo addressed to the Federal Ministry of Power, the GenCos warned that persistent liquidity shortfalls are threatening the stability of the entire power value chain and called for urgent structural reforms.
N2.4trn Debt Accumulated in 2025
The power producers disclosed that N2.4 trillion of the total debt was accumulated in 2025 alone, largely due to a recurring N200 billion monthly shortfall.
According to the memo, out of about N280 billion in monthly invoices, only 35 percent is paid, leaving a widening funding gap.
They cautioned that if the trend continues, total debt could escalate to N8.8 trillion by December 2026.
Generation Capacity vs Supply Reality
GenCos also highlighted structural inefficiencies in the sector. Although installed generation capacity has risen to 15,500 megawatts, only about 5,000 megawatts are transmitted to end users.
The companies stressed that despite liquidity challenges, fuel constraints, and infrastructure bottlenecks, they continue operations daily to sustain power generation nationwide.
Call for Presidential-Led Reform
To avert systemic collapse, the GenCos recommended:
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A presidential-led power sector reform initiative
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A long-term debt resolution framework
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Strengthened coordination across the electricity value chain
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Policies aimed at restoring investor confidence
Expert Calls for Governance Discipline
Reacting to the development, energy economist Prof. Wumi Iledare emphasized the need for governance discipline, particularly as states increase participation in electricity generation and distribution.
He noted that the Nigerian Bulk Electricity Trading Plc (NBET) remains central to market stability, serving as a creditworthy intermediary that supports investor confidence in a fragile electricity market.
However, he warned that sustainable reform requires alignment across gas supply, transmission, and distribution, adding that partial or strategic vertical integration may enhance efficiency and reduce market fragmentation.
FG’s N501bn Intervention
The Federal Government recently issued a N501 billion power sector bond under the Presidential Power Sector Debt Reduction Programme to address long-standing arrears owed to generation companies.
The bond, which achieved full subscription, attracted participation from pension funds, banks, and institutional investors. The initiative is expected to ease liquidity constraints that have weakened the sector for more than a decade.
Despite this intervention, GenCos maintain that deeper structural reforms are required to prevent further deterioration of Nigeria’s electricity industry.
