Nigeria is facing the threat of a nationwide blackout as gas companies cut supply to power plants over an unresolved debt crisis amounting to N5.6 trillion owed to electricity generation companies (GenCos). The move has sparked fresh concerns about the stability of the national grid and the country’s capacity to sustain electricity supply.
Confirming the development in an interview with The PUNCH, Dr. Joy Ogaji, Managing Director and Chief Executive Officer of the Association of Power Generation Companies (APGC), warned that unless urgent steps are taken, Nigeria could sink further into darkness. Her warning follows a recent national grid collapse earlier in the week, which plunged the entire country into blackout. Although partial restoration has since brought generation back to about 4,000 megawatts, many plants remain far below full capacity.
Ogaji explained that the liquidity crisis in the sector has spiraled, with an additional N1.6 trillion debt accumulating between January and August 2025 alone. This has pushed the overall debt profile to N5.6 trillion. She recalled that on July 25, President Bola Tinubu met with GenCos to discuss an estimated N4 trillion in legacy debts and unpaid invoices. At the time, the President appealed for patience while the government verified claims and promised a N4 trillion bond programme to plug 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 noted that nearly 60 per cent of GenCos’ revenue is tied to payments for gas supply, making the debt crisis directly responsible for the current reduction in gas deliveries. With suppliers already scaling down, she warned that the power market could soon grind to a halt. Beyond gas, she said operators face mounting challenges including maintenance of ageing equipment, procurement of spare parts, and pressure from creditors unwilling to wait for repayment.
“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.
Ogaji further criticized the Federal Government’s 2025 budget, which allocated N900 billion to the power sector without clear funding, calling it insufficient given that GenCos issue monthly invoices of N270 billion but receive only about N70 billion, leaving a deficit of N200 billion each month.
She also raised concerns over the government’s plan to issue promissory notes to clear the debts, saying the terms remain vague and risky. She highlighted potential challenges such as exposure to volatile interest rates, currency fluctuations, credit risks, and refinancing difficulties. “GenCos will not make concessions that undermine our obligations to other creditors,” she stressed, warning that any breach of contract by the government could trigger ripple effects across their financial commitments.
Ogaji urged the Federal Government, alongside the Nigerian Electricity Regulatory Commission (NERC), the Debt Management Office, and the Nigerian Bulk Electricity Trading Plc, to urgently engage GenCos on a workable settlement plan. She warned that without swift action, prolonged blackouts could further cripple homes, businesses, and the economy.
Meanwhile, the Transmission Company of Nigeria confirmed that power supply had partially recovered to nearly 4,000 megawatts by Thursday, but many plants remain below optimal output, reflecting the fragile state of the grid.
Industry experts caution that unless the government decisively addresses the debt overhang and liquidity crunch, Nigeria’s electricity sector risks deeper collapse with devastating consequences nationwide.
