A severe electricity crisis is poised to grip Nigeria in the coming weeks, with gas suppliers threatening to cut off fuel to thermal power plants due to an estimated N3.3 trillion in outstanding debt owed by power generation companies. This drastic measure could significantly exacerbate the nation’s already dire power shortage.
Dr. Joy Ogaji, the Chief Executive Officer of the Association of Power Generation Companies (APGC), revealed this critical situation in a recent interview. She warned that the escalating debt across the entire electricity value chain is pushing the sector towards a major collapse. Her statements come as Nigerians have been experiencing increasingly prolonged and frequent power outages since the start of the year.
Data from the Nigerian Independent System Operator (NISO) indicates a sharp decline in power generation, recently falling below 4,000 megawatts. This shortfall is primarily attributed to gas constraints impacting thermal power plants, which form the backbone of electricity production. As of Tuesday, the 11 electricity distribution companies (DisCos) were collectively receiving a mere 3,053 megawatts, making consistent power supply across their service areas virtually impossible. Consumers, already struggling with the rising cost of fuel and intense heat, have expressed widespread frustration over the deteriorating electricity service.
NISO’s operational data highlights the magnitude of the problem. Thermal power plants require approximately 1,629.75 million standard cubic feet (mmscf) of gas daily to operate at full capacity. However, as of February 23, 2026, actual gas supply stood at a mere 692.00 mmscf per day, less than 43% of the necessary volume. Consequently, several power plants have reportedly shut down, while the Transmission Company of Nigeria (TCN) resorts to load shedding, rationing the limited available power among the DisCos. The DisCos themselves have repeatedly cited gas shortages as the reason for the widespread outages on their public platforms.
**Deepening Debt Crisis at the Core**
Ogaji explained that the root of this crisis lies in the persistent failure of the Nigerian Bulk Electricity Trading Plc (NBET) to fully settle payments for electricity generated by the GenCos since the sector’s privatization. She stated that the government currently owes generation companies approximately N6.8 trillion, with about 70% of this amount linked to thermal power generation. Crucially, she clarified that roughly 70% of the debt pertaining to gas-fired power plants is owed to the gas suppliers themselves, meaning they are collectively owed about N3.3 trillion out of the N4.76 trillion tied to thermal generation.
Gas suppliers have now formally informed the GenCos that they will cease supplying gas to power plants unless outstanding payments are made. The GenCos, meanwhile, maintain meticulous records of all unpaid invoices from NBET.
“NBET is tasked with purchasing power from GenCos and selling it to DisCos. The expectation was full payment upon purchase, but since 2013, they have never paid in full, leading to this accumulating debt of N6.8 trillion,” Ogaji stated.
She provided a stark breakdown of the debt’s growth: “From 2015 to December 2024, the debt profile climbed to N4 trillion. In each month of 2025, there was a shortfall of N200 billion, totaling N2.4 trillion for the year, bringing the cumulative debt to N6.4 trillion by the end of December 2025. As of March 2026, the debt has reached N6.8 trillion, with an additional N200 billion expected by the end of this month, pushing it towards N7 trillion.”
**The Gas Supplier’s Dilemma**
Given that thermal plants constitute approximately 70% of electricity generation on the national grid, a substantial portion of the outstanding debt is directly owed to gas suppliers. “The generation companies operate both hydro and thermal power plants. The thermal plants rely on gas, while hydro plants use water and thus have no gas suppliers to pay,” Ogaji elaborated. “Out of the 30 power plants on the grid, about 30% are now hydro, thanks to the addition of Zungeru’s 700 MW and other smaller hydro facilities. The remaining 70% are gas-powered.”
This means that for every N100 invoiced by thermal plants to NBET, N70 is earmarked for gas suppliers. Applying this ratio, approximately N3.3 trillion of the N6.8 trillion debt is owed to gas producers, whose fuel is essential for the majority of Nigeria’s electricity.
Ogaji unequivocally stated that the current electricity shortages are a direct consequence of this escalating debt crisis. “Yes, it is 120% correct to say that the debt is the reason we are in darkness,” she asserted.
She further emphasized the dire situation with gas suppliers: “Gas is unavailable because the gas suppliers have made it clear that if we need gas, we must provide payment upfront. We owe them substantial amounts. The gas suppliers have been remarkably patient, enabling thermal plants to continue generating power. However, they have now stated that without payment, there will be no gas for the thermal power plants.”
**Financial Strain on Power Producers**
The inability of GenCos to receive timely payments has also crippled their ability to service bank loans secured during the 2013 power sector privatization. Ogaji highlighted the precarious financial state of GenCos, citing reports of banks threatening to take over power plants due to defaulted acquisition loans.
Compounding these financial woes is the drastic depreciation of the naira since the loans were taken. “In 2013, during privatization, GenCos secured loans from various banks to enhance power availability for Nigeria. However, with the lack of payment, they are unable to repay these loans. Furthermore, they took these loans in dollars when the exchange rate was N155 to $1. Today, the rate is N1,400 to $1. Therefore, even if the government were to pay the N6.8 trillion today, it would not be sufficient for GenCos to cover payments to gas suppliers, banks, and operational maintenance costs,” she explained.
Industry stakeholders warn that any prolonged disruption in gas supply, given that thermal plants contribute about 70% of grid power, could severely reduce generation capacity and worsen the electricity crisis for both households and businesses nationwide.
**Government’s Response and Historical Context**
In response, the Minister of Power, Adebayo Adelabu, stated through his media aide, Bolaji Tunji, that the Federal Government is actively addressing the situation in collaboration with the Minister of State for Petroleum (Gas), Ekperikpe Ekpo. The spokesman for the gas minister declined to comment.
Despite the outstanding legacy debts, gas companies supplied 179.79 billion standard cubic feet (bcf) of gas to power firms between January and July 2025, valued at approximately N607 billion. However, as of December 2024, reports indicated that the Federal Government and some power generation companies owed over N2.7 trillion in legacy debts to Nigerian gas producers.
This is not the first time gas suppliers have halted operations due to debt. In the first quarter of 2024, gas companies similarly suspended supply, leading to weeks of darkness. A previous government intervention, with promises that gas producers claim were unfulfilled, followed. Last year, the government proposed clearing the N2.7 trillion debt through royalty payments, a plan for which no updates have been provided.
Currently, thermal plants consume the largest share of domestic gas supply, even as many GenCos remain indebted to gas producers. Reports indicate one major power plant owes an international oil company over N500 billion in unpaid gas debt. GenCos maintain they can only settle these obligations after the Federal Government clears the N6.8 trillion owed to them.
**Pricing Disparities and Subsidy Strain**
Barth Nnaji, Chairman of Geometric Power and former Minister of Power, expressed dismay that Nigeria, despite possessing over 200 trillion cubic feet of proven gas reserves, struggles to supply adequate gas to its power plants. “It’s quite perplexing. We are a gas-rich country, yet we struggle to supply enough gas to our power plants. It’s a contradiction that many find hard to understand,” he commented.
Nnaji noted that while the official domestic gas price for power generation was set at $2.42/MMBtu, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) revised it down to $2.13/MMBtu effective April 1, 2025. However, GenCos often procure gas from the open market at prices of $2.70 or higher due to supply constraints and contract terms.
“Because most electricity is generated using gas, and GenCos depend heavily on sourcing this gas from the open market, the disparity between the regulated and actual prices continues to strain the sector,” Nnaji explained. He warned that this pricing gap exacerbates liquidity challenges in the electricity sector, contributing significantly to the over N1 trillion electricity subsidy recorded in the first half of 2025 and the growing trillion-naira debt owed to GenCos by the government. The benchmark gas-to-power price remaining below market realities places an unsustainable burden on power producers.
In December 2025, the Minister of State for Petroleum Resources (Gas) announced President Bola Tinubu’s authorization to settle N185 billion in long-standing debts to natural gas producers to stabilize power generation. This payment, to be executed through a royalty-offset arrangement, was intended to restore confidence among suppliers concerned about persistent indebtedness in the sector.
