The Federal Government said it is taking necessary steps to offset the N4.7tn debt owed to power generation companies to avert a possible nationwide blackout.
This came as stakeholders expressed fears that some power generation companies might be forced to shut down due to a lack of liquidity in the sector unless there is an urgent intervention by the Federal Government to clear the debts to Gencos.
However, the Federal Government said it would do everything possible to prevent Gencos from shutting down their plants as the issue is getting attention.
In an interview with our correspondent, the Minister of Power, Adebayo Adelabu, assured Nigerians that the government would take action to prevent power plants from shutting down as a result of financial crises.
Speaking through his media aide, Bolaji Tunji, the minister disclosed that efforts are ongoing to pay the power generation companies and the gas suppliers.
Faced with N4.7tn debt, our correspondent gathered that generation companies are facing challenges in running their power plants.
Our correspondent gathered that gas-fired thermal plants are mostly affected as they are unable to pay gas companies supplying them with feedstock.
Recently, Transcorp Power lamented that it was being owed about N650bn for the power it generated, saying the lack of liquidity affected its ramp-up plans.
In December 2024, it was reported that gas companies formally notified all Gencos of their planned suspension of gas supply due to mounting debts. However, the intervention of the Federal Government appeared to have saved the country from another darkness like the one witnessed in the first quarter of 2024.
Sources in the power sector told our correspondent that generation companies are struggling to make ends meet, following the Federal Government’s failure to clear the N4.7tn debt.
The sources, who preferred not to be mentioned due to the matter’s sensitivity, disclosed that some Gencos declare profits in anticipation that the Federal Government would pay the money but the debt had continued to increase by the day.
Our correspondent gathered that at the end of every month, over N200bn is added to the debt burden owed to the Gencos.
According to a document sighted by our correspondent, the total invoice from January to December 2024 was N2.7tn, out of which N762.1bn was paid, leaving an outstanding of N1.94tn.
This indicates that the Gencos were only able to recover 28.18 per cent of their total debt for the first 11 months of 2024.
For instance, in January 2024, Gencos’ invoice was N281.33 but only 33.80 per cent was paid. In February when the invoice read N208bn, the Gencos received 9.3 per cent. From January to December 2024, the trend continued and the debts piled up daily.
Operators who pleaded anonymity stated that though some Gencos like Transcorp and Geregu declared profits at the end of the year, the money was being held on to by the Federal Government.
“People say we make money and they are always quick to mention two generation companies. But if you have sold your goods and the money is not coming to you, how will you break even? You make sales but the debtor refuses to pay. That’s the challenge Gencos face,” an operator said.
Another source added that generation companies are at the mercy of the Federal Government.
“We are making profits in the expectation that the government will pay us, even without any clear line of sight on payment options. As of December 2024, N4tn is owed to Gencos. The government has refused to pay electricity subsidies,” he stated.
The operators feared that if nothing is done urgently, many power plants might stop running or be denied access to gas supply to avoid incurring more debts.
Some wonder how the Federal Government plans to offset the debt with a budget of N900bn for the sector.
Gencos are only struggling, we don’t know how the government will clear the N4.7tn debt with a budget of N900bn. I just pray Nigeria will get it right. But sustainability is not possible without money,” another source stated.
However, the minister of power, Adelabu, through his media aide, said the issue is currently getting the required attention, promising that all the players in the value chain will be paid.
“We are always intervening. I can assure you that no power plant will shut down; nothing like that will happen because of the effect of that on the economy.
“The minister has already made a case for them for the government to pay the outstanding and the legacy debt. The government will not allow things to get to where the Gencos will now say they can no longer generate electricity.
“Both Gencos and gas suppliers; all the value chain (will be paid). The government will not allow anything to happen that will cause a problem for the economy,” he said.
Speaking with our correspondent recently, the Chief Executive Officer of the Association of Power Generation Companies, Dr Joy Ogaji, disclosed that the Gencos are suffering, and they need urgent and pragmatic solutions to ease their liquidity crisis, stressing that the liquidity crisis is N4.7tn.
“As for liquidity, Gencos are seriously suffering and urgently need pragmatic solutions to ease the liquidity crisis, totalling N4.7tn,” Ogaji stated.
The President and Group Chief Executive Officer of Transcorp Plc, Owen Omogiafo, lamented that Transcorp Plc as a group has an installed capacity of 2,000 megawatts, but it is currently generating about half of that due to illiquidity.
“For Transcorp Plc as a group, our installed capacity is 2,000 megawatts but available capacity today is about a thousand of that. Why? Is it because we don’t want to put in more? Is it that we don’t have the wherewithal to increase that? No!
“But when you look at the liquidity challenges that we’re facing, it’s interesting to know that Transcorp Group alone is owed about N650bn by the government.
“We’re owed about N650bn from the power that we’ve generated. So, if you look at it as an investor, I want to be able to do more. I want to run a sustainable business. But at the same time, we need to be able to ensure that there’s liquidity, and the money is coming back so I can continue to reinvest,“ Omogiafo said during a TV interview recently.
The minister of power had earlier confirmed that the Federal Government owed electricity generation companies and electricity distribution companies over N4tn.
Giving a breakdown, the minister said N2tn was owed to Gencos as legacy debt and another N1.9tn was owed to them as part of electricity subsidy for 2024. He disclosed that the Discos were owed N450bn for the 2024 electricity subsidy.
Adelabu had said in February, “One of the major issues that concerns me is the huge debt in the sector. We are talking about legacy debt, which is across the board, over N2tn, and we still have an unpaid subsidy for 2024; we have another N1.9tn owed to them as part of electricity subsidy for 2024, while Discos are owed N450bn for 2024 electricity subsidy.
