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Power generation companies, GenCos, on Monday, warned that power plants across the country were facing imminent shutdown over a huge N4 trillion debt owed by the Federal Government.
The GenCos in a statement issued by the Board of Trustee Chairman, the Association Power Generation Companies, APGC, Col. Sani Bello, said they were currently owed N2 trillion for power supplied in 2024 and N1.9 trillion in legacy debts.
The companies noted that plants were being paid less than 30 per cent of monthly invoices for power supplied to the national grid.
The companies stated: “It is no more news that the power generation companies have continued to bear the brunt of the liquidity crisis in the Nigerian Electric Supply Industry (NESI).
“GenCos on their part as responsible investors with patriotic zeal have made large-scale investments and have continued to demonstrate absolute commitment by ramping capacities in line with their contract these over (10) years, amid system constraints, policies & regulations that are not investors friendly, increasing debts owed by the FGN without a clear financing plan, lack of firm contracts and a market without securitisation but based on best endeavours, thereby hampering future planning.
“Notwithstanding this and other severe difficulties the GenCos have battled with since takeover in 2013, they have kept to the terms of their contractual agreements by ramping up capacity which has been largely constrained systemically.
“Against the backdrop of the many challenges facing the power sector in Nigeria, the crises from cash liquidity are on the top burner and have reduced GenCos ability to continue to perform their obligations, thereby threatening to completely undermine the Electricity value chain.
“The GenCos expectations of being settled through external support such as the World Bank PSRO has also been dampened due to other market participants’ inability to meet their respective distribution linked indicators (DLIs), enshrined in the Power Sector Recovery Program (PSRP)”.
The GenCos added: “In the light of the severity of the issues highlighted above, the GenCos are requesting that immediate and expedited action is taken to prevent national security challenges that may result from the failure of the GenCos to sustain steady generation of electricity for Nigerians.
“The 2024 collection rate has dropped below 30%, and 2025 is not any better, severely affecting GenCos’ ability to meet financial obligations. Tax and Regulatory Challenges: High corporate income tax, concession fees, royalty charges, and new FRC compliance obligations are further straining GenCos’ revenue. GenCos are currently owed about N4 trillion (N2 trillion for 2024 and N1.9 trillion in legacy debts). No possible solutions, including cash payments, financial instruments, and debt swaps are in sight.
“The 2025 government budget allocates only N900 billion, raising concerns about its adequacy to cover arrears and future payments. The power generated by GenCos have continued to be consumed in full without corresponding full payment, notwithstanding the commencement of the Partial Activation of Contracts in the NESI which took effect from July 1, 2022, the minimum remittance order, bilateral market declaration, waterfall arrangement, the risks of inflation, forex volatility with no dedicated window to cushion the effect of the forex impact, the supplementary MYTO order which leaves about 90% of GenCos monthly invoices unmet without a bankable securitisation, or financing plan. This situation has dire consequences for the GenCos and by extension the entire power value chain”.
The companies which called for the implementation of payment plans to settle all outstanding GenCos invoices, observed that “the flow of money within the power industry is one of the fundamental problems preventing Nigerians from enjoying continued and sustainable improvement in electricity supply”.
