Key Points

• Gencos reject debt waiver tied to federal negotiations.

• Proposed 50 percent debt forfeiture deepens power-sector tensions.

• Sector stakeholders warn the move threatens financial stability.

The federal government asked Nigeria’s electricity generation companies to give up half of the N5 trillion they owe in market debts, but they have said no. The deadlock shows how weak the national grid’s financial structure is and signals more problems between operators and policymakers.

Several executives from generation companies, or Gencos, say that the proposal effectively makes them take on losses caused by the power sector’s ongoing lack of liquidity. They say these problems are caused by government inefficiencies, tariff gaps, and payment delays that happen all the time.

Gencos say no to the debt waiver plan

The companies say that any restructuring must include a clear timeline for paying back the money, open market reforms, and promises that all future bills will be paid in full and on time. They say that giving up half of the outstanding debts would make it harder for them to pay their bills, pay back their loans, and make the much-needed upgrades to Nigeria’s power generation.

Funding problems put a lot of stress on power companies

Many Gencos have a lot of debt because they have to pay for plants and equipment, which means they rely on monthly payments that don’t always come in full. Executives say that writing off 50 percent of outstanding debts would push several operators to the brink because they would have to pay for petrol, maintenance and loans.

Pushback stops federal restructuring plans

The government, for its part, says that the offer is meant to clean up the market and get the sector ready for new investment. But it looks like negotiations are stuck because there is no agreement. Analysts say that the grid will stay unstable and the supply will stay unreliable until the liquidity crisis is solved with a settlement that everyone can agree on.