There are indications that the Federal Government indebtedness to the power sector would hit N6.4 trillion by the end of 2025 from the current N6 trillion earlier reported in October, indicating an increase of 6.25 per cent.
This came as investigation revealed that the debts which included legacy debt was incurred between 2015 and 2025 respectively.
The Chairman of the Association of Power Generation Companies, APGC, Board, Col. Sani Bello (Retd), had expressed concerns over the mounting debt burden, arguing that it was severely constraining GENCOs’ operations.
Bello stated that despite these constraints, power generation companies have continued to make the necessary sacrifice and have kept the national grid running.
However, the GENCOs on an enquiry to current status of the debts, expressed fears to Vanguard that the indebtedness could hit N6.4 trillion by the end of the year, indicating a monthly shortfall of 200 billion.
To this end, the breakdown which included a N4 trillion at the end of 2024, saw a debt record of N2.4 trillion in 2025 when adding the monthly shortfall of N200 billion.
Meanwhile, an operator at the power sector who spoke to Vanguard described as unrealistic the federal government’s promises to offset the debt, saying “It remains audio money. A political promise yet to materialise. We are running at ‘I better pass my neighbour level’ as we cannot operate fully.”
Experts react
However, reacting to incessant lingering debts in the power sector, Dr Muda Yusuf, Chief Executive Officer Centre for the Promotion of Private Enterprise, CPPE, stated: “As a result, government intervention has become unavoidable in the short term to prevent system collapse and sustain electricity supply. However, the current trajectory, characterised by rising sector debt currently at about ?4 trillion, is fiscally unsustainable without deeper structural corrections, improved transparency, and gradual but credible reform implementation.
“The power sector operates as a tightly linked chain. Financial distress in one segment quickly transmits to others. Currently, the GENCOs struggle to pay gas suppliers and DISCOs are unable to generate sufficient revenues to meet obligations to GENCOs. Transmission infrastructure suffers from underinvestment and governance challenges. These conditions have entrenched a systemic liquidity crisis, undermining sector confidence and sustainability.
“Given the scale and urgency of the crisis, government intervention to bridge the sector’s financing gap has become inevitable in the short term. Recent actions, including bond issuances to settle outstanding obligations particularly to gas suppliers and GENCOs are aimed at preventing a breakdown of the electricity industry supply system.
“Such interventions are necessary to maintain power availability for households and businesses while longer-term reforms are gradually implemented”.
One promise, too many
The federal government had earlier this year, pledged to pay the GENCOs 50 per cent of a N4 trillion debt targeted enhancing their operations.
The Minister of Power, Mr Adebayo Adelabu, who made the promise, said that while the government can’t pay the entire N4 trillion, it would clear N2 trillion before the end of the year.
VANGUARD.
