₦5.6tn Debt Crisis Threatens Nigeria’s Power Supply

Nigeria is facing an escalating electricity crisis as gas suppliers cut back on deliveries to power plants over an outstanding debt of ₦5.6 trillion owed to generation companies.

The situation, which has already triggered concerns about grid stability, comes just days after another nationwide blackout. Although partial restoration has lifted output back to around 4,000 megawatts, many plants remain below capacity.

Dr. Joy Ogaji, Managing Director of the Association of Power Generation Companies, confirmed the development, warning that the liquidity crunch could plunge the country into deeper darkness if not resolved urgently.

She explained that from January to August 2025 alone, fresh arrears of ₦1.6 trillion had accumulated, swelling the sector’s debt burden. In July, President Bola Tinubu had met with the GenCos to address an estimated ₦4 trillion legacy debt, pledging a ₦4 trillion bond programme to close the liquidity gap. However, Ogaji noted that almost two months later, no follow-up engagement has taken place.

With 60 percent of GenCos’ revenue tied to gas payments, the impact is already filtering down to suppliers. “Gas producers are scaling back supply. Our machines require critical maintenance, spare parts are overdue, and creditors are refusing to wait,” she said.

She faulted the 2025 federal budget for earmarking ₦900 billion to the power sector without cash backing, describing it as insufficient. Ogaji also raised concerns about the government’s plan to issue promissory notes, citing risks such as interest rate exposure, FX volatility, and refinancing challenges.

“Patriotism alone cannot sustain power plants. Unless the government, NERC, NBET, and the DMO move swiftly, Nigeria faces prolonged blackouts,” she warned.

The Transmission Company of Nigeria confirmed some recovery on the grid, but industry analysts caution that without urgent reforms and financial restructuring, the electricity market could spiral into deeper collapse.