The Nigerian power sector is facing an imminent crisis as power generation companies (Gencos) grapple with a staggering N4.7 trillion debt, leading to fears of a nationwide blackout.
The Federal Government is under intense pressure to clear the debt to prevent a shutdown of power plants across the country.
Minister of Power, Adebayo Adelabu, assured Nigerians that the government is taking urgent steps to address the crisis. “We are always intervening. I can assure you that no power plant will shut down; nothing like that will happen because of the effect of that on the economy,” Adelabu stated. He also emphasized that both Gencos and gas suppliers would be paid, with ongoing efforts to clear outstanding debts.
The financial struggle has been particularly hard on gas-fired thermal plants, which are unable to pay gas suppliers due to a liquidity shortage. For instance, Transcorp Power, one of Nigeria’s major energy producers, revealed that it is owed approximately N650 billion for the electricity it generated, which is severely impacting its operational capacity.
“The liquidity challenges we’re facing are quite severe. We’re owed N650 billion, and without these payments, we can’t increase capacity or invest in sustainability,” said Owen Omogiafo, CEO of Transcorp Plc.
The crisis deepened in December 2024 when gas suppliers threatened to suspend services due to unpaid debts, causing fears of a recurrence of the nationwide blackout experienced in early 2024. Though the Federal Government intervened, the debts continue to pile up, with over N200 billion being added to the total debt each month.
Dr. Joy Ogaji, CEO of the Association of Power Generation Companies, stressed the urgency of resolving the liquidity crisis, stating, “Gencos are seriously suffering and urgently need pragmatic solutions to ease the liquidity crisis, totaling N4.7tn.”
Despite these challenges, the government has pledged to tackle the issue, but stakeholders remain concerned about the feasibility of clearing such a massive debt with a sector budget of just N900 billion.