President Bola Tinubu is set to hold discussions with the leadership of Nigeria's power-generating companies (Gencos) in a bid to address the critical N4 trillion debt that threatens the stability of the nation's electricity supply. This move is a direct response to the escalating concerns raised during a recent meeting between the Minister of Power, Adebayo Adelabu, and the chairpersons of the Gencos in Abuja. The urgency of the situation stems from fears that the national power grid could collapse due to severe financial constraints within the sector. The Gencos had earlier issued a stark warning to the Federal Government regarding the growing debt, which has now reached a staggering N4 trillion. This figure includes N2 trillion owed for power supplied in 2024 and N1.9 trillion in legacy debts. Bolaji Tunji, the Minister's Special Adviser on Strategic Communications and Media Relations, revealed that the Federal Government has committed to immediately settling a significant portion of the debt. The remaining balance is to be addressed through financial instruments, such as promissory notes, within the next six months. This plan is to be presented during the scheduled meeting between President Tinubu and the Gencos’ leadership.
“There is a need to pay a substantial amount of the debt in cash. At the minimum, let us pay a substantial amount, then ask for debt instruments in promissory notes to pay the rest," Adelabu said.
He stressed the Federal Government's determination to prevent a collapse of the power sector, describing the situation as a national emergency.
“We recognise the urgency of this matter. The government is committed to resolving this debt to stabilise the sector and prevent further crisis," he said.
When questioned about the meeting's date, Tunji indicated that details were still under discussion.
Col. Sani Bello (retd), Chairman of Mainstream Energy Solutions and head of the Association of Power Generating Companies, led the Gencos delegation and highlighted the impending collapse of the sector due to the mounting debt and liquidity challenges. He warned that the financial strain has severely hampered operations and limited the ability to fund necessary maintenance and infrastructure upgrades. “Without immediate intervention, the entire power ecosystem is at risk,” he cautioned.
Kola Adesina, Chairman of Egbin Power and First Independent Power Limited, echoed these concerns, stressing the critical importance of the power sector to industries, homes, and hospitals. “Failure is not an option,” he asserted, underscoring the national emergency.
Minister Adelabu acknowledged that systemic failures and policy inconsistencies have contributed to the sector's current predicament. He stated that the government's focus extends beyond debt repayment to include reforms aimed at easing operational challenges.
He advocated for the full liberalization of the electricity market and urged Nigerians to accept cost-reflective tariffs, arguing that subsidies are no longer sustainable. He assured that the government would continue to provide targeted subsidies for economically disadvantaged citizens. “Consumers must pay the appropriate price for the energy they consume,” he stated.
Dr. Joy Ogaji, CEO of APGC, detailed the challenges faced by the Gencos, including inconsistent gas supply, persistent payment defaults, and foreign exchange volatility. She highlighted the dramatic depreciation of the naira, from N157/$1 in 2013 to N1,600/$1, which has significantly impacted maintenance budgets and loan repayments.
“Gencos have borne unsustainable rists from grid failures to unproductive taxes while remaining patriotic," she said.
Adelabu disclosed that regulatory reforms are being planned to enhance market stability and reduce levies. He called on the Gencos to collaborate with the government in educating the public on electricity consumption, efficient usage, and tariff realities.