FG Power Sector Debt to Hit N6.4 Trillion by 2025, Threatening National Electricity Supply
The Federal Government’s indebtedness to power generation companies (GENCOs) is projected to reach N6.4 trillion by the end of 2025, up from N6 trillion reported in October. This represents a 6.25 percent increase and underscores the growing financial strain within Nigeria’s electricity sector.
Investigations reveal that these debts, including legacy obligations, were incurred over a decade, from 2015 to 2025. Col. Sani Bello (Retd), Chairman of the Association of Power Generation Companies (APGC), has raised concerns over the mounting debt, noting that it severely limits GENCOs’ ability to operate efficiently. Despite these challenges, Bello emphasized that the companies have continued to keep the national grid running, sacrificing profitability to ensure an uninterrupted power supply.
Current estimates suggest the monthly shortfall in debt payments is around N200 billion, adding up to a projected N6.4 trillion by year-end. Analysts also highlight that the federal government’s promises to offset the debt remain largely unfulfilled, with many industry players describing the pledges as political rhetoric rather than actionable plans.
Experts warn that the ongoing debt crisis could destabilize the electricity sector. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), stated that government intervention is unavoidable in the short term to prevent a collapse of electricity supply. He explained that financial stress in one part of the power chain—GENCOs, gas suppliers, and distribution companies (DISCOs)—quickly affects the entire system, creating systemic liquidity challenges and undermining investor confidence.
Earlier this year, the federal government pledged to pay 50 percent of the N4 trillion debt owed to GENCOs, with the Minister of Power, Mr. Adebayo Adelabu, promising to clear N2 trillion by the end of 2025. However, power sector operators remain skeptical, calling for faster, more concrete interventions and longer-term reforms to sustain electricity supply and prevent further sector collapse.
source: vanguard