The Federal Government’s indebtedness to power generation companies (GENCOs) is projected to reach N6.4 trillion by the end of 2025, up from the previously reported N6 trillion in October, representing a 6.25% increase.

Investigation shows that the debts, which include legacy obligations, were incurred between 2015 and 2025. Col. Sani Bello (Retd), Chairman of the Association of Power Generation Companies (APGC), warned that the mounting debt burden is severely constraining GENCO operations. Despite these challenges, companies have continued to keep the national electricity grid operational.

GENCO sources told Vanguard that the monthly shortfall of N200 billion could push the total indebtedness to N6.4 trillion, building on a N4 trillion debt recorded at the end of 2024.

However, some power sector operators remain skeptical about government promises to clear these debts, describing them as “political pledges yet to materialize”, with full operational recovery remaining elusive.

Experts have highlighted the systemic nature of the crisis. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), noted:

“Financial distress in one part of the sector quickly affects others. GENCOs struggle to pay gas suppliers, while DISCOs cannot generate sufficient revenue. Transmission infrastructure is underfunded, and governance issues persist. Without government intervention, the system risks collapse.”

He added that short-term interventions, such as bond issuances to settle outstanding obligations, are crucial to maintaining electricity supply while longer-term structural reforms are implemented.

Earlier this year, the government pledged to pay 50% of a N4 trillion debt to GENCOs to boost their operations. Minister of Power, Adebayo Adelabu, assured that while the full N4 trillion cannot be settled immediately, N2 trillion would be cleared by year-end.