Key Points

• GenCos are owed a staggering N4 trillion, impacting their operations.

• The Ministry of Power is actively working with the Ministry of Finance to resolve the debt.

• Financial and fiscal challenges are deepening the liquidity crisis in Nigeria’s power sector.

The Nigerian government is working to settle a huge N4 trillion debt owed to Power Generation Companies (GenCos).

This debt has accumulated due to the government’s commitment to subsidizing electricity costs.

Bola Tunji, the Special Adviser to the Minister of Power, confirmed this in an interview with the News Agency of Nigeria (NAN) on Tuesday in Abuja.

Collaboration with finance ministry to resolve the debt

Tunji responded to the Association of Power Generation Companies’ (APGC) concerns and reassured the public that the Ministry of Power is collaborating with the Ministry of Finance to find a solution.

“We are fully aware of the debt,” Tunji said. He further explained that part of this debt dates back to the previous administration.

The government is making significant efforts to resolve the issue, with both ministries working together to address it.

GenCos face financial challenges due to ongoing debt

This debt is making it difficult for GenCos to function properly. The APGC reported that GenCos are owed N2 trillion for power supplied in 2024, in addition to N1.9 trillion in older debts.

This financial burden, coupled with challenging economic conditions, is worsening the liquidity crisis in Nigeria’s power sector.

Sani Bello, the Chairman of the APGC’s Board of Trustees, warned that the ongoing debt crisis is putting the country’s electricity supply at risk. It may limit the GenCos’ ability to provide a reliable power supply.