Nigeria’s power sector is grappling with a worsening financial crisis, with the Federal Government’s liabilities projected to reach approximately N6.2 trillion by the end of 2025, driven by the rapid exit of premium customers from the national grid.
The government is currently burdened with a N4 trillion legacy debt to power generation companies (GenCos), while new arrears have surged to N1.6 trillion as of August 2025 and are expected to climb to N2.2 trillion by December, bringing total liabilities to N5.6 trillion to date.
According to sources at the Nigerian Electricity Regulatory Commission (NERC), the share of commercial customers relying on the national grid has plummeted from 20% to 13%, as unreliable power supply and rising costs push businesses and high-end households toward alternative energy solutions.
In 2024, manufacturers spent a record N1 trillion on self-generation, while premium households increasingly adopted solar power. NERC licensed 24 bulk consumers to generate their own power and approved 22 off-grid projects, adding about 289 megawatts of capacity outside the national grid.
The mass exodus of premium customers has led to a monthly tariff shortfall of approximately N200 billion, exacerbating the sector’s liquidity crisis. States such as Jigawa, Zamfara, Lagos, Delta, and Katsina have signed renewable energy deals, and the Federal Government plans to disconnect its agencies from the grid, leaving it primarily to households and businesses unable to afford alternatives.
This trend threatens the financial viability of the sector, as GenCos face challenges meeting operational costs, with some warning of potential shutdowns due to unpaid debts.
The Minister of Power, Adebayo Adelabu, acknowledged the crisis during a recent meeting with President Bola Tinubu and GenCo representatives, describing the N4 trillion legacy debt as a “grave threat” to the sector’s stability.
He proposed a N4 trillion bond program to address the debt, which has received preliminary approval from the President, though implementation depends on verifying the debts’ legitimacy.
Adelabu highlighted progress, noting a 70% increase in sector revenue from N1 trillion in 2023 to N1.7 trillion in 2024, reducing government subsidy obligations by over N700 billion.
Despite these efforts, frequent grid collapses—13 in the past 13 months—underscore the sector’s fragility, compounded by gas supply shortages and aging infrastructure.
Energy experts urge urgent investment in grid modernization and diversification of power sources to avert a potential nationwide blackout.
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