KEY POINTS
- Nigeria’s power generation companies are shutting down due to a N6.8 trillion debt burden
- Gas supply disruptions and unpaid debts are severely limiting electricity production
- Government plans to raise N4 trillion may help, but concerns remain over implementation and impact
Nigeria’s electricity crisis is deepening as several power generation companies shut down operations due to a mounting debt burden of about N6.8 trillion. The crisis has severely limited their ability to maintain infrastructure, procure gas, and meet basic operational costs.
According to the Association of Power Generation Companies, the sector is facing worsening liquidity constraints. Its Chief Executive Officer, Joy Ogaji, warned that operators can no longer service equipment due to lack of funds, highlighting the severity of the situation across the electricity value chain.
Industry data shows that the debt has been accumulating since 2015 and is increasing by approximately N200 billion monthly. Power generation companies are also indebted to gas suppliers and transporters, owing about 60 percent of payments due, further straining energy supply operations.
Gas supply constraints threaten electricity output
With gas-fired plants accounting for nearly 70 percent of Nigeria’s electricity generation, irregular gas supply has become a major concern. Suppliers are increasingly unwilling to provide gas without payment guarantees, putting further pressure on electricity production nationwide.
Data from the Nigerian Independent System Operator revealed that 16 out of 33 power plants were not operational as of recent checks. The remaining plants generated about 3,705 megawatts, far below the country’s energy needs, with national output stagnating around 4,000 megawatts for years.
Many generation companies are resorting to bank loans to sustain operations, while others are unable to pay salaries. In some cases, company owners have pledged personal assets as collateral to access funding, reflecting the deep financial distress within the sector.
The Federal Government of Nigeria has announced plans to raise N4 trillion through domestic capital markets to offset part of the debt. However, only a fraction of the funds has been secured so far, with the remainder expected through phased bond issuances.
