GenCos Forfeit ₦2.3 Trillion Due to Grid Constraints

Power-generating companies in Nigeria have suffered losses exceeding ₦2.31 trillion over the past twelve years due to electricity that could not be transmitted or utilized as a result of persistent grid and operational constraints.

According to new figures from the Association of Power Generation Companies (APGC), the cumulative losses between 2013 and September 2025 represent the monetary value of electricity that was available for generation but left unused because the national grid could not evacuate it to consumers.

Presenting the data at the association’s 20th anniversary celebration, APGC Managing Director and Chief Executive Officer, Joy Ogaji, described the situation as a growing threat to the stability of Nigeria’s power sector. She said the losses reflect “annual capacity payment” gaps — the financial value of generation capacity that could have been utilized if not for inefficiencies in transmission and distribution networks.

While power producers regularly declare available capacity between 6,000MW and 7,000MW, the national grid typically evacuates only about 4,500MW, leaving an average of more than 2,000MW stranded each year.

Between January and September 2025 alone, stranded capacity averaged 2,221.99MW, resulting in losses worth ₦119 billion within nine months. Since the privatisation of the power sector in 2013, the cumulative market loss has surpassed ₦2.3 trillion — enough, according to analysts, to build hundreds of substations or fund new gas plants.

Historical data from the APGC showed that 2016 was one of the worst years on record, with an average of 3,828MW stranded and ₦273.32 billion lost. In 2015, the sector forfeited ₦214.93 billion due to 3,010MW unutilised, while losses in 2017 and 2018 stood at ₦236.47 billion and ₦264.08 billion respectively. Between 2019 and 2020, stranded generation averaged 3,600MW, costing the industry over ₦500 billion combined.

Although there was a slight improvement in recent years, inefficiencies remain widespread. In 2021, ₦159.85 billion was lost due to stranded generation of about 2,248MW, while in 2022 the figure dropped to ₦132.19 billion. The losses rose again to ₦162.06 billion in 2023 and ₦154.72 billion in 2024.

In 2025, the average generation capacity stood at 6,806MW, but only 4,637MW was actually utilised — meaning about 32 percent of potential output was wasted. The highest monthly losses were recorded in August at ₦20.17 billion, followed by September at ₦16.86 billion and July at ₦15.77 billion, while February saw the least losses at ₦8.34 billion.

Ogaji lamented that the inefficiencies and poor payment structure within the electricity market have worsened the liquidity crisis for generation firms. “All the power that remains stranded attracts capacity charges, which are not part of what the government is currently paying. What we are owed now only covers energy, not capacity,” she explained.

She said the implementation of key agreements signed during the 2013 privatisation collapsed after the Nigerian Bulk Electricity Trading Plc (NBET) took over as the market operator. “At the beginning, GenCos were paid capacity charges, but that changed once NBET was introduced. Payments became irregular, and the sector started struggling,” she added.

According to her, the failure to pay capacity charges undermines the financial stability of power producers, many of whom rely on such payments to service loans and maintain their facilities. “Without a sustainable payment mechanism, it is impossible to carry out major maintenance or expand national generation capacity,” she said, warning that the ongoing liquidity issues discourage investors and threaten the reliability of existing plants.

Echoing similar concerns, the Minister of Power, Adebayo Adelabu, recently revealed that over 10,000 megawatts of generation capacity remain stranded in idle plants across the country. He described the situation as “wasteful,” noting that Nigeria’s main challenge is not power generation but the inability to transmit and distribute available energy effectively.

“In Nigeria today, we have over 10 gigawatts of stranded generation capacity. Plants that should be powering industries and homes are lying idle,” Adelabu said. “Our immediate problem is ensuring stable transmission, effective distribution, and proper metering, not generation.”

Industry experts warn that these inefficiencies have broader economic consequences. The APGC estimates that a 1 percent increase in power supply could raise Nigeria’s GDP by up to 3.9 percent. If even half of the stranded 2,000–3,000MW had been consistently delivered to industries and households, the country could have achieved an additional 10–12 percent growth over the past decade.

“Electricity is the backbone of industrialisation and job creation. Nigeria cannot grow its economy when power plants are sitting idle,” Ogaji said.

To reverse the losses, the APGC urged the Federal Government to honour contractual obligations under power purchase agreements, strengthen the transmission and distribution infrastructure, ensure full and timely payments to generation companies, and promote investments in grid expansion and gas supply.

The association also recommended the adoption of bilateral energy contracts, off-grid power projects, and targeted grid upgrades to enhance power evacuation and improve reliability across the electricity value chain.