The 23 power generation companies in Nigeria have issued a warning that they can no longer ensure a reliable electricity supply, citing a deepening liquidity crisis in the electricity market, with debts now surpassing N4 trillion.
In a statement released on Monday, signed by the Chairman of the Board of Trustees, Col. Sani Bello (retd.), the firms, operating under the Association of Power Generation Companies, expressed their concerns.
They also accused the Nigerian Bulk Electricity Trading Plc and other stakeholders of neglecting Generation Companies (GenCos) in the implementation of the National Electricity Supply Industry’s (NESI) “waterfall arrangement.” This system allows other service providers to receive 100% of their market invoices, while GenCos receive only 9% to 11% of what they are owed.
The statement said, “The Power Generation Companies (GenCos) feel compelled to issue this press release to alert the Federal Government and key stakeholders about the urgent need to address the issue of insufficient payments for the electricity they generate and that is consumed on the national grid. This situation is currently jeopardizing the operation of their power generation plants.
“In light of the numerous challenges facing Nigeria’s power sector, the liquidity crisis is particularly pressing and has significantly diminished GenCos’ ability to fulfill their obligations, thereby threatening to completely disrupt the electricity value chain.”
They indicated that the current debt burden and operational challenges could lead to an imminent shutdown of power plants unless urgent measures are taken.
The companies cautioned that the ongoing failure to pay for electricity generated and consumed on the national grid is driving the Nigerian power sector toward a complete collapse.
In February, Minister of Power Adebayo Adelabu revealed that the government owes more than N4 trillion to electricity generation and distribution companies in subsidies.
He detailed that N2 trillion is owed to generation companies (GenCos) as legacy debt, while an additional N1.9 trillion is allocated for the 2024 electricity subsidy. Furthermore, distribution companies (DisCos) are owed N450 billion for the same subsidy in 2024.
