The Senate has raised serious concerns about Nigeria’s electricity sector as it revealed that the Federal Government’s outstanding debt to power generating companies has ballooned to a staggering N800 billion in 2025 alone, adding to a pre-existing debt burden of over N3 trillion. This revelation was made over the weekend during a stakeholders’ retreat on Nigeria’s power sector reform in Ikot Ekpene, Akwa Ibom State.
Speaking at the retreat organized by the Nigerian Electricity Regulatory Commission (NERC), the Chairman of the Senate Committee on Power, Senator Enyinnaya Abaribe, said the government has not made any payments to electricity generation companies (GenCos) in the first four months of 2025, resulting in a monthly shortfall of N200 billion. This alarming backlog, he said, has pushed the industry to the edge of collapse, threatening the nation’s already fragile power supply system.
“There’s a liquidity crisis in the power sector. The generating companies are owed so much, the distribution companies are also owed so much. The tariff shortfall that we have means that every month the government owes N200bn of payments, and for this year, 2025, no payment has been made. In other words, we’re already short by N800bn,” Abaribe stated.
According to Senator Abaribe, the ripple effects of the government’s indebtedness are far-reaching. Generation companies are unable to meet their obligations to gas suppliers who power their plants. These gas firms, in turn, are threatening to halt supplies due to non-payment. With limited liquidity, the entire electricity value chain is at risk of grinding to a halt—jeopardizing economic activities and everyday life across the country.
The issue is further compounded by the fact that the Distribution Companies (DisCos) are also burdened by huge receivables from consumers, including ministries, departments, and agencies of government. Power consumers reportedly owed DisCos N54 billion in February alone, as revealed in a recent NERC report.
Abaribe noted that resolving the crisis will require tough decisions from both federal and state governments. With the Electricity Act 2023 empowering states to manage power generation and distribution independently, there is a growing need for synergy and coordinated action between both tiers of government.
“The hope is this: a decision must be taken by the Federal Government and the state governments… Do we subsidise fuel or do we subsidise electricity that supports production and growth across sectors? That is the critical choice before us,” he said.
In his remarks, Minister of Power Adebayo Adelabu highlighted some recent gains in power generation under the Bola Tinubu administration but acknowledged that deep-rooted issues such as lack of funds, vandalism of power infrastructure, and weak enforcement mechanisms continue to undermine the sector’s progress.
“Only in this country are energy assets being vandalised at such a scale. It’s hard to plan for sustainable energy delivery when infrastructure is constantly under attack,” Adelabu lamented.
Representing the Governor of Akwa Ibom State, Deputy Governor Senator Akon Eyakenyi stressed the importance of reliable electricity supply to the growth of Small and Medium Enterprises (SMEs), which she described as the “engine room” of Nigeria’s economy.
“SMEs rely heavily on stable electricity to power their operations. Any setback in the power sector has a direct impact on employment and economic development at the grassroots,” she said.
Industry observers say urgent reforms are needed, including full cost-reflective tariffs, timely subsidy payments, the activation of performance-based contracts with GenCos and DisCos, and improved metering to reduce technical and commercial losses.
With an outstanding electricity debt now at N800 billion for the year and rising, the Federal Government faces mounting pressure to act decisively to prevent a full-scale breakdown of Nigeria’s power infrastructure. Stakeholders at the NERC retreat expressed cautious optimism that if swift policy action is taken, including better debt management and stronger regulatory enforcement, the sector could still be repositioned for long-term viability and growth.