Nigeria’s power sector is teetering on the brink of collapse as electricity generation companies (GenCos) warn of an imminent nationwide blackout over mounting debts that have now hit N5.2 trillion. The warning comes after a fresh N1.2 trillion debt was accumulated in the first half of 2025, compounding long-standing financial obligations that have crippled the sector’s operations.
The Chief Executive Officer of the Association of Power Generation Companies (APGC), Dr. Joy Ogaji, in a statement on Monday, lamented that GenCos have operated patriotically for years despite chronic underpayment, but warned that “patriotism alone cannot keep the machines operational and keep the lights on.”
According to Ogaji, the outstanding debts include:
N2 trillion from unpaid 2024 invoices,
N1.9 trillion in legacy debts dating back to 2015, and
N1.2 trillion for energy supplied in the first six months of 2025.
She disclosed that GenCos submit invoices averaging N250 billion monthly, yet the Federal Government has only budgeted N900 billion for 2025, which, as of July 21, had not been cash-backed.
“The power we generate continues to be consumed in full without corresponding full payment,” Ogaji stated, warning that GenCos are struggling to fund gas purchases, maintenance, and critical repairs necessary to keep turbines running.
She further criticized the Nigerian Electricity Regulatory Commission (NERC)’s planned reduction of Band A electricity tariffs from N209 per kilowatt-hour to N160/kWh beginning August 1, calling it a “policy based on unfunded subsidy assumptions that will further destabilize the sector.”
Industry insiders warn that the GenCos’ financial distress could trigger a nationwide power crisis if plants begin shutting down due to operational constraints. Ogaji stressed that some GenCos have already resorted to seeking financial support outside the electricity market to sustain gas supply to power plants, describing the situation as “a huge contagion risk that must be urgently addressed.”
Power sector analysts fear that continued underfunding will deter future investments, as GenCos may be forced to suspend capacity expansion, which would worsen Nigeria’s already fragile electricity supply.
Responding to the alarm, Minister of Power, Adebayo Adelabu, through his spokesperson Bolaji Tunji, admitted the debt crisis was a major concern and confirmed that discussions are ongoing to settle part of the debt.
“I know the minister is concerned and has raised the issue at the appropriate quarters. Efforts are presently being made to ensure part of the debt is defrayed,” Tunji said. However, he did not provide a specific timeline for payment.
In May, the Federal Government promised to settle a substantial portion of the debt immediately and clear the remainder using financial instruments such as promissory notes within six months. Two months later, GenCos say no tangible payment has been made.
Nigeria’s electricity market has long been plagued by liquidity challenges, poor tariff implementation, and huge subsidy gaps. The APGC warns that if immediate action is not taken, the power sector could collapse entirely, plunging the country into prolonged blackouts and worsening economic hardship.
For now, GenCos continue to operate, but industry experts say their patience is running thin. Without urgent government intervention and a sustainable financial framework, Nigeria’s hope for stable electricity supply remains uncertain.