The Power Generation Companies (GenCos) have threatened an imminent shutdown if the federal government fails to settle outstanding invoices totaling over N4 trillion.
The chairman of the GenCos Board of Trustees (BOT), Col. Sani Bello (Rtd), raised the alarm over a looming shutdown of operations in a statement on Monday in Abuja.
According to Bello, the GenCos have been forced to alert the government and key stakeholders on the urgent need to address the issue of inadequate payments for electricity already generated and fed into the national grid.
“The situation is now critical and threatens the continued operation of power generation plants across the country,” Bello said.
Bello pointed out that GenCos have long bore the burden of the persistent liquidity crisis in the Nigerian Electricity Supply Industry (NESI).
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He warned that the deteriorating financial conditions could have national security consequences if power generation becomes unsustainable.
Bello in the statement sought a quick and decisive government intervention to avert a collapse of electricity supply.
“Outstanding Payments: GenCos are currently owed about ₦4 trillion (₦2 trillion for 2024 and ₦1.9 trillion in legacy debts). No possible solutions, including cash payments, financial instruments, and debt swaps is in sight,” Bello said.
“The 2025 government budget allocates only ₦900 billion, leading to concerns about GenCos adequacy to cover arrears and future payments.”
Bello stated that this situation has dire consequences for GenCos and by extension the entire power value chain.
He lamented that this has increased the debts owed by the Federal Government without a clear financing plan, lack of firm contracts, and a market without securitisation but based on best endeavours, thereby hampering future planning.
“GenCos liquidity challenges are further worsened by the various policies introduced such as the payment waterfall in the NESI, which deprioritizes payment to GenCos as service providers such as MO/NISO, NERC, and NBET /leaders all receive 100% payment of their market invoices starting from May 2019,” Bello said.
“As a result of this, no one is under pressure to ensure GenCos invoices are fully settled. The implication of this, is that GenCos only gets paid a portion of their invoices (9%, 11%) from whatever amount is left.
“This is an aberration as it is a clear departure from existing terms of the Power Purchase Agreement (PPA) guiding the contractual relationship between GenCos and the Nigeria Bulk Electricity Trading Plc (NBET), by which NBET as buyer has contracted to purchase the available capacity as agreed under the PPA.
“GenCos should be accorded the utmost priority when it comes to payment to enable them to have the capacity to continue to produce the electricity which is the product around which the entire power value chain is built.
