GenCos Warn Of Power Sector Collapse As ₦5trn Debt Mounts

Nigeria’s power generation companies have warned that the country’s electricity sector is on the brink of collapse, citing over ₦5 trillion in unpaid debts, worsening liquidity, and deepening operational bottlenecks that threaten economic growth and investor confidence.
In a statement marking Nigeria’s 65th Independence anniversary, the Association of Power Generation Companies (APGC) described the generation segment as standing at a “critical crossroads.” Chief executive officer Joy Ogaji, who signed the statement, said the crisis has been aggravated by unpaid subsidies that cost the federal government more than ₦200 billion monthly and the increasing diversion of gas away from power plants.
“Without urgent, coordinated, and sustained action, the sector risks further deterioration, a situation that would have far-reaching implications for national development, economic stability, and investor confidence,” Ogaji said.
The association rejected viral social media claims that the government had approved a ₦4 trillion refinancing plan to clear arrears owed to 27 GenCos between 2015 and 2023, stressing that no such approval had been communicated. Analysts say the controversy underscores the chronic lack of policy clarity in the sector.
Despite an installed generation capacity of more than 13,000 megawatts, Nigeria consistently produces just 3,500–5,000MW due to weak transmission infrastructure, gas shortages, and financial illiquidity. Since the 2013 privatisation, the industry has remained trapped in a cycle of cash shortfalls, cost-reflective tariff gaps, and regulatory uncertainty.
The APGC estimated total outstanding debts at ₦5.6 trillion as of last month and warned that without clearing arrears, incentivising gas supply, and scaling transmission investment, the sector faces imminent collapse.
“The progress made so far risks reversal if liquidity challenges are not resolved, if investments are not incentivised, and if tariffs do not reflect the true cost of power,” Ogaji said. “Electricity supply is critical to industrial growth, job creation, and poverty reduction.”
The association commended Nigerians’ resilience, saying the Independence anniversary should serve as a reminder that only bold reforms can transform the power sector into a driver of sustainable development.
“Unless bold steps are taken to resolve liquidity challenges, incentivise investment, and guarantee cost-reflective tariffs, the dream of a stable power supply will remain elusive, even as the country moves closer to its seventh decade of nationhood,” it said.