A significant number of Nigeria’s power generation companies (GenCos) have ceased operations due to a mounting N6.8 trillion debt. This financial strain is crippling their ability to maintain equipment, secure gas supplies, and cover basic operational expenses, according to a Bloomberg report cited by Nairametrics.

Joy Ogaji, Chief Executive Officer of the Association of Power Generation Companies (APGC), stated, “We cannot maintain the machines.” She emphasized that without adequate funding, essential equipment servicing becomes impossible, highlighting the severity of the cash flow crisis confronting the sector.

Industry figures indicate that as of the end of February, power generation companies were owed approximately N6.8 trillion. This debt has been accumulating since 2015 and continues to grow by roughly N200 billion monthly. GenCos report that they owe gas suppliers and transport service providers about 60% of what is owed to them, further straining the energy supply chain.

Gas-fired plants are responsible for nearly 70% of Nigeria’s electricity generation, making an uninterrupted gas supply critical. However, gas suppliers are becoming increasingly hesitant to continue deliveries without assurances of payment.

Operational data from the Nigerian Independent System Operator (NISO) reveals significant underperformance in power generation. As of a recent Tuesday afternoon, 16 out of 33 power plants were not supplying electricity. The remaining plants were generating a combined 3,705 megawatts. Nigeria’s average generation has remained around 4,000 megawatts for years, a stark contrast to the generation capacity of countries with smaller populations.

Despite being Africa’s largest economy, Nigeria continues to grapple with persistent power shortages. Only slightly more than half of the population is connected to the national grid, and even those connected experience frequent outages.

The situation facing generation companies is described as critical. Some firms have resorted to taking bank loans to sustain operations, while others struggle to meet salary obligations. In certain instances, company owners have provided personal collateral to access financing. Rising operational costs and unpaid invoices are compounding the financial stress.

The prolonged liquidity crisis has left many operators vulnerable, with limited access to affordable funding to stabilize their operations. The Federal Government has announced plans to raise N4 trillion from domestic capital markets to partially settle outstanding debts owed to power companies. This initiative aims to address a portion of the backlog dating back to 2015, with the remainder expected through phased bond issuances.

While industry stakeholders have welcomed the proposal, concerns persist regarding the pace of implementation and whether it will be sufficient to halt the growing debt accumulation. In October 2025, Nairametrics reported that the Federal Government had concluded implementation frameworks for a N4 trillion government-backed bond aimed at settling verified arrears owed to power generation companies and gas suppliers.