GenCos threaten nationwide shutdown over N4trn debt
The electricity power generation companies (GenCos) have warned that the over N4 trillion unpaid invoices owed by the federal government and stakeholders for electricity generated threatens their operations.
In a statement on Monday, signed by chairman of board of trustees, Association of Power Generation Companies (APGC), Sani Bello, the GenCos asked the federal government and key stakeholders to urgently address the issue.
According to the association, the issue is currently threatening the continued operation of their power generation plants.
“It is no more news that the power generation companies (GenCos) have continued to bear the brunt of the liquidity crisis in the Nigerian Electric Supply Industry (NESI),” the statement reads.
The association said they have made large-scale investments and have continued to demonstrate commitment by increasing capacities that align with their contract, spanning over 10 years.
The GenCos said expectations of being settled through external support such as “the World Bank PSRO has also been dampened due to other market participants’ inability to meet their respective distribution linked indicators (DLI), enshrined in the Power Sector Recovery Program (PSRP)”.
Moreso, they said the 2024 payment collection rate dropped below 30 per cent, and “2025 is not any better, severely affecting GenCo’s ability to meet financial obligations”.
“Tax and Regulatory Challenges: High corporate income tax, concession fees, royalty charges, and new FRC compliance obligations are further straining GenCos’ revenue,” the GenCos said.
“Outstanding Payments: GenCos are currently owed about N4 trillion (N2 trillion for 2024 and N1.9 trillion in legacy debts). No possible solutions, including cash payments, financial instruments, and debt swaps, are in sight.
“Budget Allocation Concerns: The 2025 government budget allocates only N900 billion, raising concerns about its adequacy to cover arrears and future payments.”
Furthermore, the group said that liquidity challenges are further worsened by the various policies introduced.
As a result of the policies, the association said “no one is under pressure to ensure GenCos invoices are fully settled”.
“The implication of this is that GenCos only get paid a portion of their invoices (9%, 11%) from whatever amount is left,” the association said.
The GenCos demanded immediate implementation of payment plans to settle all outstanding GenCos invoices.
“Reprioritization of payments under the waterfall arrangement to give full priority to a hundred percent payment of GenCos’ invoices as at when due. A clear financing plan to backstop the exposures in the NERC’s Supplementary Order to the MYTO and the DRO 2024,” the association said.
They also requested the provision of payment security backed by the World Bank and the African Development Bank (AfDB) to guarantee full payment to GenCos to enable them to meet their critical needs, ensuring adequate generation and expansion.
The GenCos urged the federal government to liberalise the market to create confidence and ensure the viability and creditworthiness of the power sector.
Also, the association demanded “full effectiveness of all market agreements, firm monitoring, and enforcement of the rules by the regulator on all market participants”.
In light of the severity of the issues, the GenCos requested that immediate action be taken to prevent national security challenges due to their failure to sustain Nigerians’ steady electricity generation.
