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Electricity Towers
Power Generation Companies has warned of
imminent shutdown due to a N4 trillion debt owed by the Nigerian government for
electricity generated and supplied to the national grid.
A statement signed by the Board of Trustees
Chairman, Association of Power Generation Companies, Sani Bello, said the debt,
which includes N2 trillion for 2024 and N1.9 trillion in legacy debts, is
threatening the continued operation of their power generation plants.
In February, the Minister of Power, Adebayo
Adelabu, said the Nigerian government owes Electricity Generation Companies and
Distribution Companies in the country over N4 trillion debt.
Adelabu added that the debt burden is crippling
the sector, making it challenging for the Generation Companies to perform
optimally.
According to the companies, this is against the
backdrop of the many challenges facing the power sector in Nigeria, the crises
from cash liquidity are on the top burner and have reduced its ability to
continue to perform their obligations, thereby threatening to completely
undermine the Electricity value chain.
The firms added that their expectations of
being settled through external support such as the World Bank Power Sector Recovery
Operation have also been dampened due to other market participants’ inability
to meet their respective Distribution-Linked Indicators enshrined in the Power
Sector Recovery Program.
Mr Bello said access to forex is another
problem, adding that given that major operation and maintenance needs in the
generation sub-sector are dollarized, insisting that the importance of a
specialised window or stable dollar allocation option for the Generation
Companies cannot be overemphasised.
He added that Generation Companies are of the
position that there is a need for a coordinated approach by all stakeholders in
the Nigerian Electric Supply Industry to address the liquidity issue
realistically and sustainably in the power sector so that Nigerians can have
access to reliable electricity supply.
In light of the severity of the issues
highlighted, he said the Companies are requesting that immediate and expedited
action is taken to prevent national security challenges that may result from
the failure of the Generation Companies to sustain steady generation of
electricity for Nigerians.
According to the companies, the 2024 collection
rate has dropped below 30 per cent, and 2025 is not any better, severely
affecting their ability to meet financial obligations. High corporate income
tax, concession fees, royalty charges, and new FRC compliance obligations are
further straining GenCos’ revenue.
Generation Companies are currently owed about N4 trillion (N2 trillion for 2024 and N1.9 trillion in legacy debts), with no possible solutions, including cash payments, financial instruments, and debt swaps are in sight.