Nigeria’s electricity sector is facing a potential crisis as gas supply from key producers to power plants slows dramatically due to an accumulated debt of N5.6 trillion owed to power generation companies (GenCos).
Industry experts warn that without urgent government intervention, the country could face widespread blackouts, disrupting homes, businesses, and critical infrastructure.
The Managing Director and CEO of the Association of Power Generation Companies (APGC), Dr. Joy Ogaji, confirmed the development in an interview with our correspondent.
She highlighted that the ongoing liquidity crisis in the sector has left gas suppliers compelled to reduce deliveries, putting electricity generation at risk.
“Gas suppliers have already started reducing supply. With critical maintenance required on our plants and outstanding obligations to other creditors, sustaining generation has become almost impossible,” Ogaji explained.
From January to August 2025 alone, an additional N1.6 trillion debt accumulated in the sector, bringing the total outstanding obligations to N5.6 trillion.
The debt largely stems from unpaid invoices and legacy payments owed by distribution companies and the government, directly affecting gas supply contracts.
Ogaji recalled that President Bola Tinubu met with GenCos on July 25, 2025, to discuss an estimated N4 trillion debt, approving a N4 trillion bond program in principle to bridge the liquidity gap.
However, nearly two months later, no follow-up engagement has been reported, raising fears among gas suppliers and GenCos about the sustainability of electricity supply.
“About 60 per cent of GenCos’ revenues go to gas producers. With this debt burden, the reduction in gas supply is inevitable, and the electricity market could soon grind to a halt,” she warned.
The warning comes shortly after another national grid collapse earlier this week left large parts of Nigeria in darkness.
Partial restoration has brought back approximately 4,000 megawatts of power, but many plants continue to operate below capacity due to constrained gas supply.
Ogaji emphasized that the sector’s structural challenges—including inadequate gas supply, maintenance of power plants, procurement of spare parts, and obligations to other creditors—limit the ability of GenCos to maintain stable electricity generation.
“Operators remain patriotic and committed to keeping the lights on, but factors outside their control, especially gas supply, are critical hurdles that require urgent attention,” she added.
The APGC CEO also raised concerns over the Federal Government’s plan to issue promissory notes to settle outstanding debts.
She noted that the details remain unclear, with risks including foreign exchange volatility, interest rate exposure, and credit challenges, all of which could impact the willingness of gas suppliers to maintain current supply levels.
“Promissory notes cannot be repurchased in the open market, creating refinancing risks at maturity.
Any breach of contractual terms by the government has a ripple effect on our relationships with other creditors,” Ogaji said.
She urged the Federal Government, the Nigerian Electricity Regulatory Commission (NERC), the Debt Management Office, and the Nigerian Bulk Electricity Trading Plc (NBET) to engage GenCos immediately to develop viable solutions to the liquidity crisis and ensure consistent gas supply to power plants.
Meanwhile, the Transmission Company of Nigeria (TCN) confirmed that power generation has partially recovered to nearly 4,000 megawatts.
However, several plants remain below full capacity, demonstrating the fragility of the national grid amid shrinking gas supply.
Industry stakeholders caution that unless urgent interventions address the N5.6tn debt and secure stable gas supply contracts, Nigeria’s electricity sector may face deeper systemic collapse, threatening economic stability and daily life across the country.
Experts insist that structural reforms are essential to attract private sector investment and stabilize electricity generation.
Addressing the debt overhang and ensuring timely gas supply are seen as crucial steps to prevent another round of blackouts that could derail growth and undermine public confidence in Nigeria’s power sector.
Dr. Ogaji concluded, “GenCos remain patriotic investors, but patriotism alone cannot run power plants.
The government must act urgently to resolve this debt and ensure reliable gas supply; otherwise, the entire electricity market risks plunging the nation into darkness once more.”