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:

• A presidential-led power sector reform initiative

• A long-term debt resolution framework

• Strengthened coordination across the electricity value chain

• 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.

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Electricity workers under the National Union of Electricity Employees (NUEE) have issued a 21-day nationwide strike notice to the Federal Government over alleged wage violations, non-remittance of statutory deductions, and worsening labour conditions in the Nigerian Electricity Supply Industry (NESI).

The union warned that failure to address the concerns within the stipulated period could trigger industrial action capable of disrupting electricity generation and distribution across the country.

Union Accuses DISCOs, GENCOs of Labour Violations

In a letter dated January 26, 2026, and addressed to the Minister of Power, NUEE’s Acting General Secretary, Igwebike Dominic, expressed frustration over what he described as persistent anti-labour practices since the privatisation of the electricity sector more than a decade ago.

According to the union, several power generation companies (GENCOs) and distribution companies (DISCOs) have failed to negotiate or implement collective agreements and conditions of service.

The workers also alleged non-implementation of the 2025 National Minimum Wage Act and its consequential adjustments across parts of the sector.

Non-Remittance of PAYE, Pension Contributions

NUEE further accused employers in the power sector of deducting Pay As You Earn (PAYE) tax, pension contributions, and union dues without remitting them to the appropriate authorities.

The union claimed that pension deductions in some distribution companies have remained unpaid for extended periods, in certain cases spanning several years.

This, according to the workers, exposes employees to long-term financial uncertainty and undermines trust in the pension system.

Restriction of Union Activities

The union also alleged that some companies have restricted workers’ constitutional rights to unionise and engage in collective bargaining.

It stated that union activities are allegedly prohibited within company premises, while deducted union dues are not remitted.

NUEE described the situation as a violation of labour laws and freedom of association guaranteed under the Constitution.

Tariffs Up, Workers’ Welfare Stagnant

Electricity workers argued that despite repeated electricity tariff increases and band reclassifications, employees have not benefited from improved welfare packages.

According to the notice, there have been no promotions, salary increments, or bonuses, even as revenues to power companies have reportedly increased.

The union noted that workers often face public frustration over poor electricity supply while operating under what it termed difficult and insecure working conditions.

Privatisation Under Scrutiny

The union also criticised investors in the electricity sector, alleging failure to meet post-privatisation commitments such as capital injection, improved metering, network expansion, and enhanced power supply.

It described the situation as a reflection of systemic challenges within NESI and called for urgent government intervention.

Call for Federal Government Action

NUEE urged the Federal Government to convene stakeholders to resolve the crisis within 21 days of receipt of the letter.

The union warned that failure to address the grievances may compel workers to deploy legitimate labour actions permitted under Nigerian labour laws.

The strike notice raises concerns about potential disruptions in Nigeria’s already fragile power sector if negotiations fail.

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This development was revealed at the second Nigerian Electricity Supply Industry (NESI) Stakeholders’ Meeting of 2025, organized by the Nigerian Electricity Regulatory Commission (NERC). Representing the Special Adviser to the President on Energy, Eriye Onagoruwa, a spokesperson confirmed that plans are in motion to resolve the debt before the end of the next quarter.

Onagoruwa acknowledged the weight of the burden GenCos have carried and noted that the Presidency is considering alternative financial mechanisms to deal with the outstanding liabilities, given the federal government’s fiscal limitations.

“We understand the pressure GenCos are under. We’re working with both the Coordinating Minister of the Economy and the Debt Management Office to find workable solutions,” she stated. “The internal approval process is already underway.”

Although no fixed deadline was announced, she expressed confidence that progress would be communicated by the next NESI meeting, signaling a possible update within the next three months.

The GenCos, meanwhile, have been sounding the alarm over what they describe as crippling debts, which some sources say now exceed ₦4 trillion. The Senate Committee on Power recently pointed out that tariff shortfalls have left the government owing an estimated ₦200 billion monthly to electricity producers.

The stakeholders’ meeting brought together key players from across the electricity value chain to discuss pressing issues — from the widening metering gap and the Presidential Metering Initiative, to the potential impacts of the Electricity Act 2023.

Discussions also touched on the proposed Meter Asset Fund, the transition to a multi-tier electricity market, and the newly established State Electricity Regulatory Commissions. In light of these decentralization efforts, John Akinnawo, Acting MD of the Nigerian Bulk Electricity Trading Plc, warned against fragmentation and called for strong policy coordination led by the Nigerian Independent System Operator (NISO).

In a presentation, Abdu Mohammed Bello, NISO’s Managing Director, laid out the agency’s roadmap for enhancing market transparency and operational efficiency.

Industry players at the meeting welcomed the Presidency’s commitment, viewing it as a potential turning point in stabilizing Nigeria’s electricity supply and ensuring long-term sustainability.

As the nation waits for action, the coming months are expected to be pivotal in addressing financial hurdles that have long held back the sector.

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He explained that the debt burden has significantly hampered the power sector’s ability to provide reliable electricity to Nigerian consumers.

Providing details, he stated that N2 trillion is owed to GenCos as legacy debt, while N1.9 trillion covers 2024 electricity subsidies.

Additionally, electricity distribution companies (DisCos) are owed N450 billion in subsidies for 2024, further straining the sector’s financial stability.

Adelabu stressed that the government can no longer sustain the current electricity subsidy model, necessitating a targeted intervention approach.

He acknowledged that the government must reconsider the electricity tariff structure without necessarily imposing an immediate increase.

Discussing DisCos, he lamented their reluctance to invest in network upgrades, which has hindered customer migration to Band A.

The minister disclosed that the government is reviewing electricity consumer classifications to merge them into three bands: A, B, and C.

This restructuring aims to reduce tariff disparities and improve electricity supply for consumers in lower bands across the country.

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