Electricity Generation Companies in Nigeria (GenCos) have raised the alarm over rising sector indebtedness, reporting that debt in the power industry has reached ₦6.5 trillion as of the end of last month and is projected to hit ₦8.8 trillion by December 2026.
In a memo to the Ministry of Power, GenCos urged the federal government to implement structural reforms urgently to address the financial strain. According to the memo, the sector’s debt in 2025 alone was ₦2.4 trillion, reflecting a monthly shortfall of about ₦200 billion. Of ₦280 billion in monthly invoices issued, only 35% have been paid, leading to the current accumulation of arrears.
The companies also highlighted operational challenges, noting that while installed capacity stands at 15,500 megawatts, only 5,000 megawatts are reaching consumers. The memo called for a presidential-led reform, a long-term debt solution, strengthened sector governance, and renewed investor confidence. It emphasized that GenCos operate 24/7 under difficult conditions, providing the “silent force” behind electricity supply that keeps the entire value chain functional.
Reacting to the report, Energy Economist and Executive Director of the Emmanuel Egbigah Foundation, Prof. Wumi Iledare, stressed the need for governance anchored on the quadruple “E” principles—Efficiency, Effectiveness, Ethics, and Equity. He highlighted the role of Nigerian Bulk Electricity Trading Plc (NBET) in sustaining market stability and investor confidence, while noting that long-term sustainability requires integration across generation, transmission, and distribution.
The warning comes shortly after the federal government issued a ₦501 billion inaugural power sector bond under the Presidential Power Sector Debt Reduction Program, fully subscribed by institutional investors. The bond is aimed at settling long-standing arrears that have weakened liquidity and investment appetite across the sector. Series One of the bond, also ₦501 billion, allocated ₦300 billion from capital market investors and ₦201 billion directly to participating GenCos, reflecting strong confidence in ongoing reforms.
The GenCos’ memo underscores that without immediate structural intervention, the financial and operational fragility of Nigeria’s power sector may intensify, potentially threatening electricity supply and sector growth.
