Power Generation Companies (GenCos) in Nigeria have insisted that they are owed debts in excess of N6.2 trillion, comprising both legacy and recent debts, as they receive only 35 per cent of their energy bills despite generating power in a sector crippled by unpaid bills and lacking risk protections.
The CEO of Association of Power Generation Companies (APGC), Dr Joy Ogaji, in another detailed statement to journalists on Monday, decried that Nigeria’s electricity output has stagnated at around 4,000 megawatts (MW) for years, even though the country boasts an installed generation capacity of 15,500MW.
According to her, the root cause lies in the absence of adequate sector risk protection for legacy GenCos and National Integrated Power Project (NIPP) plants, leaving them vulnerable to operational disruptions, regulatory uncertainties, and massive financial losses.
“This singular reason has kept the sector at about 4,000 MW of average grid generation for many years, notwithstanding an installed capacity of 15,500MW,” Ogaji stated.
“This is a clear anomaly in the market, and GenCos have kept meticulous records of such losses to date as a regulatory risk.”
Since the privatisation of the power sector on November 1, 2013, GenCos have scrupulously honoured their Power Purchase Agreements (PPAs), industry contracts, and privatisation terms. However, Ogaji lamented, they have been met with chronic liquidity shortfalls, defaults on obligations, heightened market volatility, and subpar performance by key players, such as distribution companies (DisCos) and trading entities.
The N6.2 trillion debt pile—far short of their full contractual entitlements—continues to balloon. GenCos incur steep expenses for gas supply, plant maintenance, foreign exchange fluctuations, and financing, yet payments cover only a fraction of these costs.
“We are only requesting our receivables, which have accumulated over the years, as verified from Multi-Year Tariff Order (MYTO) and Nigerian Bulk Electricity Trading Plc (NBET) documents for power generated and consumed,” Ogaji clarified.
“But only 35 per cent is paid, leaving a huge contagion that is not cash-backed since 2015 to date.”
This payment crisis has pushed most GenCos into technical insolvency, slashing their capacity to invest in maintenance or expansion. Ironically, GenCos are not subsidy beneficiaries but their biggest victims, bearing the brunt without relief.
Ogaji posed pointed questions underscoring the absurdity: “How would power growth in Nigeria be encouraged if GenCos are not incentivised to make capacity available for dispatch to the NESI?
What incentives does the market present for GenCos to invest towards recovery of unavailable capacity when they are denied capacity payments for what is already provided and maintained amid constrained and unutilised capacity?”
Despite GenCos’ efforts to ramp up availability, increased capacity hasn’t translated to more power for consumers. Plants sit idle as “stranded capacity,” racking up fixed charges just to remain operational. Ogaji contrasted this with global best practices in underserved markets, where available generation aligns with actual utilisation.
In Nigeria, the gap persists, stifling NESI progress.
Addressing allegations of inflated invoices, the APGC CEO detailed the ironclad verification system. Metered data comes from tariff meters (with GenCos and DisCos check meters) and is validated by the Market Operator (NISO) against System Operator figures.
Capacity is read hourly per GenCo, feeding into monthly settlement statements.
The process yields two statements monthly: a Preliminary Settlement Statement (PSS) for objections, followed by a Final Settlement Statement (FSS) incorporating feedback before payments.
“The process of verifying GenCos invoices is akin to undergoing a PhD viva,” Ogaji quipped.
“No sector participant has the power to negotiate inflated payments.”
This outcry comes amid ongoing Nigerian Electricity Supply Industry (NESI) reforms, including tariff hikes and subsidy phase-outs, yet GenCos argue core issues like risk mitigation and payment security remain unaddressed.
Without these, experts warn, Nigeria’s power deficit—exacerbating economic losses estimated at billions annually—will persist, hindering industrial growth and household reliability. APGC urges regulators, including the Nigerian Bulk Electricity Trading Company and Nigerian Electricity Regulatory Commission (NERC), to enforce contract sanctity and introduce risk protections.
As Nigeria eyes 30,000MW by 2030 under its Energy Transition Plan, resolving GenCos’ grievances could unlock stranded capacity and stabilise supply.
Ogaji’s disclosure points to a pivotal bottleneck in Africa’s largest economy, where 85 million people lack reliable electricity despite vast gas reserves.
