Nigeria’s electricity generation industry is grappling with an unprecedented crisis as a growing number of Generation Companies (GenCos) have halted operations indefinitely under the weight of N6.8 trillion in unpaid debts.
The mounting arrears have severely limited the companies’ ability to maintain critical infrastructure, secure gas supplies, and fund basic operations.
A recent report by Bloomberg highlights that the financial strain reflects deepening liquidity challenges across Nigeria’s power value chain, with operators struggling to remain afloat amid a backlog of unpaid invoices from distribution companies and government agencies.
Joy Ogaji, Chief Executive Officer of the Association of Power Generation Companies (APGC), described the situation as “critical,” warning that the sector is on the brink of collapse due to persistent cash flow constraints.
“We cannot maintain the machines,” Ogaji said. “Without adequate funding, essential equipment cannot be serviced, and generation output continues to deteriorate.”
Data from the sector indicates that GenCos were owed approximately N6.8 trillion as of February 2026, with the debt accumulating since 2015 and increasing by around N200 billion monthly.
This mounting backlog has created a cycle of indebtedness, as generation companies now reportedly owe gas suppliers and transport service providers roughly 60 per cent of what is owed to them, further straining the energy supply chain.
Operational data from the Nigerian Independent System Operator (NISO) illustrates the severity of the crisis: as of Tuesday afternoon, 16 out of 33 power plants were offline, while the remaining plants generated a combined 3,705 megawatts.
For context, Nigeria’s average generation has hovered around 4,000 megawatts for years, far below the levels required for its population and economic activities. Only slightly more than half of Nigerians are connected to the national grid, and even those with access continue to experience frequent outages.
In response, the Federal Government has announced plans to raise N4 trillion from domestic capital markets to partially settle outstanding debts owed to GenCos.
The initiative, expected to be implemented through phased bond issuances, aims to address part of the backlog accumulated since 2015.
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However, only a fraction of the targeted funds has been raised, raising concerns about whether the intervention will be sufficient to halt the sector’s deepening debt burden.
Energy and financial experts warn that without urgent and comprehensive intervention, Nigeria’s power sector could face systemic collapse.
Dr. Chidi Nwankwo, an energy policy analyst, said: “The current debt profile and shutdowns are alarming. Gas-fired plants are the backbone of our generation capacity, and interruptions here directly affect supply. Without immediate funding and structural reforms, power shortages will worsen, impacting households and industries alike.”
Aisha Bello, an energy sector economist, noted: “The N4 trillion bond plans is a step in the right direction, but it only addresses part of the legacy debt. Unless collection inefficiencies, payment delays from distribution companies, and operational mismanagement are addressed, GenCos will continue to face cash flow problems.”
Analysts warn that the combination of mounting debts, operational shutdowns, and unreliable gas supply could exacerbate Nigeria’s chronic power deficit, threatening economic activity, investor confidence, and everyday life for millions of citizens.