Nigerian GenCos Warn of Imminent Power Generation Collapse Due to N2 Trillion Debt

Nigeria’s power generation companies (GenCos) have raised an alarm over the imminent collapse of their operations due to a massive N2 trillion debt and a projected N1.7 trillion funding gap outlined in the 2024 Multi-Year Tariff Order.

In a statement issued by their board Chairman, Col. Sani Bello (rtd), the GenCos highlighted that only about 10 percent of their monthly invoices for power supplied to the national grid are being paid. They emphasized that the liquidity challenges facing the Nigerian Electricity Market have severely impacted their ability to fulfill their obligations, threatening the stability of the entire electricity value chain.

Key Points from the GenCos’ Statement:

1. Debt and Funding Gap**: GenCos are owed over N2 trillion for power already generated and consumed. The 2024 Multi-Year Tariff Order has created an additional funding gap of N1.7 trillion without a designated fund to bridge this gap.

2. Payment Shortfalls**: Despite generating and supplying power, GenCos receive only about 10 percent of their monthly payments, exacerbating their financial strain.

3. Operational Challenges**: The liquidity crisis hampers GenCos’ ability to meet obligations to lenders, maintain operations, procure spare parts, and fulfill employee-related commitments.

4. Government Actions and Responses**: While the Minister of Power announced a payment plan approved by President Bola Tinubu, involving immediate cash payments and promissory notes, GenCos demand a clear and immediate implementation plan.

5. Call for Government Intervention**: GenCos are urging the Federal Government to prioritize full payment of their invoices, provide a financing plan for the tariff gap, and secure payment guarantees backed by international financial institutions.

The GenCos’ plea underscores the critical need for systemic reforms and financial stability to sustain Nigeria’s power generation sector and ensure reliable electricity supply for the nation.