Nigeria faces electricity crunch as GenCos grapple with N6.8trn debt

Agency Report

Nigeria’s electricity generation sector is facing an unprecedented crisis as a growing number of Generation Companies (GenCos) has halted operations indefinitely under the weight of a staggering N6.8 trillion in unpaid debts, crippling their ability to maintain infrastructure, secure gas supplies, and cover operational expenses.

According to a recent report by Bloomberg, the financial strain highlights deepening liquidity challenges across the country’s power value chain, with operators struggling to stay afloat amid mounting unpaid invoices from distribution companies and government agencies.

Joy Ogaji, Chief Executive Officer of the Association of Power Generation Companies (APGC), described the situation as “critical,” warning that the sector is on the brink of collapse due to persistent cash flow constraints.

“We cannot maintain the machines,” Ogaji said. “Without adequate funding, essential equipment cannot be serviced, and generation output continues to deteriorate.”

Data from the sector indicates that GenCos were owed approximately N6.8 trillion as of February 2026, with the debt accumulating since 2015 and increasing by around N200 billion monthly.

This mounting backlog has created a cycle of indebtedness, as generation companies now reportedly owe gas suppliers and transport service providers roughly 60 per cent of what is owed to them, further straining the energy supply chain.

Operational data from the Nigerian Independent System Operator (NISO) illustrates the severity of the crisis: as of Tuesday afternoon, 16 out of 33 power plants were offline, while the remaining plants generated a combined 3,705 megawatts.

For context, Nigeria’s average generation has hovered around 4,000 megawatts for years, far below the levels required for its population and economic activities. Only slightly more than half of Nigerians are connected to the national grid, and even those with access continue to experience frequent outages.

In response, the Federal Government has announced plans to raise N4 trillion from domestic capital markets to partially settle outstanding debts owed to GenCos.

The initiative, expected to be implemented through phased bond issuances, aims to address part of the backlog accumulated since 2015.

However, only a fraction of the targeted funds has been raised, raising concerns about whether the intervention will be sufficient to halt the sector’s deepening debt burden.