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| Gencos urge swift action to clear debt |
President Bola Ahmed Tinubu faces growing calls from Nigeria’s top power generation firms—known as Gencos, to set a firm date for talks on the nation’s staggering ₦4.7 trillion debt in the sector. The companies warn that further delay could deepen financial strain and threaten stable electricity supplies across the country.
Since the privatisation of power assets in 2013, the federal government has built up arrears in payment to Gencos. The current sum of ₦4.7 trillion owes to backlog on bulk electricity purchases and subsidy obligations. At the today’s exchange rate of ₦1,600 to the dollar, that translates to roughly USD 2.9 billion—a sum that dwarfs many state budgets.
Experts say the debt is a drag on investment and a risk to national power output. The Gencos report that outdated turbines and erratic gas supplies demand fresh funding for maintenance. Failure to clear debts can stifle upgrades that raise capacity and cut down on blackouts.
At a press briefing, leaders of the Association of Power Generating Companies (APGC) pressed for a meeting with the President. They want clarity on how and when the debt will be settled. They say a face‑to‑face session with Mr. Tinubu would speed decisions on cash payments and promissory notes.
Col. Sani Bello (retd.), APGC Chair, highlighted the urgent need for fresh funds. He said meeting the debt in cash would show the federal government’s commitment. He added that combining cash and debt instruments can ease pressure on state coffers.
Power Minister Adebayo Adelabu has floated plans for partial cash payments and promissory notes for the balance. He told Genco bosses that the government aims to pay a “substantial amount” in cash up front, with the rest in debt instruments over six months.
The minister said this mix would avert collapse of vital infrastructure. He stressed that prompt payment would boost lenders’ willingness to back new projects. He also flagged moves toward full sector liberalisation and the need for cost‑reflective tariffs.
Nigeria’s current generation depends heavily on nine thermal plants, which account for 71% of output. Many of these facilities run below capacity due to unpaid bills and gas shortfalls. Experts warn that unpaid debts risk curbing output further and worsening blackouts.
Should debt persist, Gencos may cut generation or halt upgrade projects. That could reverse recent gains when average daily output rose from under 3,000 MW to peaks of 4,200 MW. Stable output underpins factory operations, hospital services, and daily life. Even a minor drop can fuel unrest in cities.
The power sector’s health links directly to Nigeria’s GDP growth. Economists peg the sector’s multiplier effect at 1.8. For every naira spent on power, nearly two more naira flow into related industries. Delays in funding thus stifle broad economic gains.
In homes, erratic supply raises costs. Households buy diesel or petrol to run generators. Estimates show Nigerians spend over ₦1 trillion annually on backup power. That drains personal budgets and lowers living standards. Prompt debt clearance could ease these costs over time.
Dr. Joy Ogaji, CEO of APGC Power, pinpoints systemic hurdles. She cites chronic payment defaults, foreign exchange volatility, and high levies. She warns that unpaid bills force Gencos to cut maintenance or seek loans at high rates. “These risks can cripple operations,” she says.
Kola Adesina, head of Egbin Power and First Independent Power, calls the situation a “national emergency.” He notes that schools, hospitals, and factories all hinge on reliable electricity. He argues that without swift action, the power sector’s woes could spark broader crises.
Beyond debt clearance, industry leaders push for reforms. They want:
1. Full Tariff Liberalisation: To set prices that cover true production costs and attract fresh investment.
2. Regulatory Review: To cut down levies that add to Gencos’ cost base.
3. Stable Gas Supply: Through contracts that guarantee delivery and reduce outages.
4. Debt Management Framework: To handle future arrears through clear timelines and instruments.
They believe these steps can attract both local and foreign investors. Improved frameworks would lower risks and boost capacity expansion.
So far, no meeting date is fixed. The Presidency has acknowledged the request but cites a full agenda. The Gencos say delays have real costs in lost capacity and extra fuel spend. They urge the President to carve out time in the coming week.
An aide to Mr. Tinubu said the Presidency sees the power sector as a priority but must align multiple stakeholders. The meeting would include the Finance Ministry, the Central Bank, and the Bureau of Public Enterprises.
If Mr. Tinubu meets the Gencos soon and sticks to the cash‑and‑notes plan, experts forecast a swift uptick in output. Clearing even half of the ₦4.7 trillion could free funds for urgent turbine overhauls. That may raise daily generation above 4,500 MW.
Longer term, liberalisation and tariff reform could attract up to USD 5 billion in fresh capital over five years. Upgraded grids and new pipelines could then deliver steady power to industry hubs. Such gains would ripple through jobs, incomes, and tax revenues.
Critics warn that hasty cash payments risk straining the federal budget. They ask if promoting debt instruments might burden future governments. Some call for transparent audits of how past funds were used. They want clear accounting before fresh disbursements.
Others point to corruption risks in the gas supply chain. They suggest the new meeting should tackle procurement oversight and anti‑fraud measures alongside debt talks. Such safeguards could boost public confidence and draw global partners.
Nigeria’s power firms stand at a crossroads. A meeting with President Tinubu could unlock the cash and reforms needed to boost output, cut costs, and fuel growth. Yet risks linger over budget strain and governance. The coming days will show if the Presidency can deliver clarity and action, or if the sector’s woes will drag on.