Nigeria is teetering on the brink of a nationwide blackout as gas companies slash supplies to power plants over an unpaid N5.6 trillion debt owed to power generation companies (GenCos), deepening fears of a full-blown energy crisis.
The development has heightened concerns about the stability of the national grid and Nigeria’s ability to sustain electricity supply, with several power plants already running below capacity.
The Managing Director/Chief Executive Officer of the Association of Power Generation Companies, Dr. Joy Ogaji, confirmed the development in an interview with The PUNCH on Thursday, warning that the situation could plunge the country “deeper into darkness” if left unaddressed.
This comes just days after yet another national grid collapse threw the entire country into blackout. Although power generation has since clawed back to around 4,000 megawatts, industry operators say the recovery is fragile and temporary.
Ogaji explained that the sector’s liquidity crisis has spiralled out of control, with an additional N1.6 trillion debt piling up from January to August 2025 alone, bringing the total owed to N5.6 trillion.
She recalled that President Bola Tinubu met with GenCos on July 25 to discuss an estimated N4 trillion debt, covering legacy debts and unpaid invoices. At the meeting, Tinubu appealed for patience while the government verified the claims and approved, in principle, a N4 trillion bond programme to close the sector’s liquidity gap.
“Almost two months after that meeting, there has been no follow-up engagement with the GenCos on how these debts will be settled,” Ogaji lamented.
She warned that with about 60 per cent of GenCos’ revenues going to gas producers, the massive debt burden has crippled their ability to pay for gas — and suppliers are now cutting deliveries.
“Gas suppliers have already started reducing supply. There are critical maintenance works on our machines, spares to purchase, and other creditors who are no longer willing to wait for payments. They now prioritise those who pay them promptly,” she said.
Despite operators’ “patriotic commitment” to keep the lights on, Ogaji said, factors beyond their control are pushing the market to the brink. She listed gas supply, machine maintenance, spare part procurement, and servicing other creditors as major hurdles.
According to her, the current market structure is incompatible with Nigeria’s economic ambitions. “No substantial private sector investment will flow into this sector unless urgent reforms are implemented. Only the Federal Government, in collaboration with NBET and NERC, can unlock these challenges,” she said.
Ogaji disclosed that GenCos’ monthly invoices average N270 billion, yet they receive only about N70 billion — leaving N200 billion outstanding each month. She criticised the 2025 federal budget’s N900 billion power sector allocation as grossly inadequate and lacking cash backing.
She also raised concerns about the government’s plan to issue promissory notes to clear the debts, arguing that the details remain unclear and have spooked investors.
“Promissory notes and bond proposals go to the root of our contractual agreements in the market. We must understand the terms, conditions, and risks before committing,” she said, warning of risks including interest rate exposure, forex volatility, credit and liquidity risks, and refinancing problems since promissory notes cannot be traded on the open market.
“GenCos will not make concessions that undermine our obligations to other creditors. Any breach of contractual terms by the government has a ripple effect on our finances and relationships with bankers and other partners,” she warned.
Ogaji urged the Federal Government, the Nigerian Electricity Regulatory Commission, the Debt Management Office, and the Nigerian Bulk Electricity Trading Plc to urgently engage GenCos on viable solutions. She also questioned whether the proposed promissory notes would be exclusive to GenCos or open to other government contractors, which could dilute settlement chances for power producers.
“GenCos remain patriotic investors, but patriotism alone cannot run power plants. Without urgent action, Nigeria risks another round of prolonged blackouts,” she said.
Efforts to obtain comments from the Minister of Power, Adebayo Adelabu, were unsuccessful as his spokesman, Bolaji Tunji, did not respond to calls or messages.
Meanwhile, the Transmission Company of Nigeria said the national grid had recovered to nearly 4,000 megawatts by Thursday. But several power plants remain offline or below capacity, highlighting the grid’s fragility.
Industry stakeholders warn that unless the Federal Government tackles the liquidity crisis and debt overhang immediately, Nigeria’s electricity sector could spiral into deeper collapse — with devastating consequences for households, businesses, and the broader economy.