The Federal Government and power generation companies (GenCos) are in a serious disagreement over how much money is owed in Nigeria’s electricity sector.
While the government says the total debt is about N4
trillion, GenCos insist that the real figure is much higher, estimating it at
around N6.3 trillion.
The Minister of Power, Adebayo Adelabu, explained the
government’s position during a press briefing in Abuja. He said the difference
in figures is due to ongoing efforts to properly review and reconcile the debt.
According to him, the calculations involve several factors, including interest
on unpaid sums and changes in foreign exchange rates.
Adelabu noted that although the government initially put the
debt at about N4 trillion as of the end of 2024, only N2.8 trillion has so far
been officially verified through auditing. He added that as reconciliation
continues, the final amount is still expected to settle around N4 trillion, not
the higher figures being mentioned by GenCos.Nigeria Travel Guides
He also revealed that more than 60 percent of the debt is
tied to gas supply. Gas is a key component used by power plants to generate
electricity, and unpaid gas bills have significantly contributed to the overall
debt burden. The minister apologised to Nigerians for the continued power
outages across the country, admitting that the financial challenges in the
sector are part of the reason for unstable electricity supply.
However, GenCos have rejected the government’s position,
saying the figures presented are incomplete and not transparent. The Executive
Secretary of the Association of Power Generation Companies, Joy Ogaji, stressed
that any accurate figure must come from a joint reconciliation process
involving all stakeholders in the power sector.
Ogaji pointed out that the last time all parties met to
reconcile the debt was in March 2025, and no fresh meeting has been held since
then. She criticised the reliance on the Nigerian Bulk Electricity Trading Plc
(NBET) alone, explaining that NBET does not handle all aspects of payments and
cannot provide a complete picture of what is owed.
According to her, GenCos’ claims cover a wide range of
outstanding payments. These include unpaid invoices for electricity generated
since 2015, capacity payments for available but unused power, and deemed
capacity charges. Other claims involve foreign exchange losses, interest on
unpaid debts calculated at NIBOR plus four percent, and Value Added Tax (VAT)
on gas supplied between 2013 and 2021.
She further explained that power plants often incur extra
costs due to frequent start-ups and shutdowns, which affect operations and
efficiency. GenCos are also seeking compensation for providing additional
services such as spinning reserve and black start—services that help stabilise
the national grid during disruptions.
In addition, operating under conditions like Free Governor
Mode, which is used to maintain grid stability, causes faster wear and tear on
equipment. GenCos argue that these costs are significant and have not been
properly accounted for in the government’s assessment.
The dispute is happening at a time when the Federal
Government is trying to reform the electricity sector by clearing old debts,
improving transparency, and making the market more financially stable. An
earlier audit had already confirmed N2.8 trillion as part of the legacy debt,
but disagreements over other components continue to create tension.
Industry experts warn that if the issue is not resolved
quickly, it could discourage investors and worsen the already fragile power
supply situation in the country. They say a clear and transparent agreement on
the actual debt is necessary to restore confidence and ensure long-term
improvements in electricity generation and distribution.
Despite the disagreement, both the government and GenCos
have expressed willingness to continue discussions.
They agree that proper and transparent reconciliation of the
debt is essential to fixing the deep-rooted challenges in Nigeria’s electricity
sector and ensuring better service delivery to Nigerians.
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