FG pegs electricity debt at N4trn, GenCos Insist on N6.3trn

The Federal Government and power generation companies (GenCos) are in a serious disagreement over how much money is owed in Nigeria’s electricity sector.

While the government says the total debt is about N4 trillion, GenCos insist that the real figure is much higher, estimating it at around N6.3 trillion.

The Minister of Power, Adebayo Adelabu, explained the government’s position during a press briefing in Abuja. He said the difference in figures is due to ongoing efforts to properly review and reconcile the debt. According to him, the calculations involve several factors, including interest on unpaid sums and changes in foreign exchange rates.

Adelabu noted that although the government initially put the debt at about N4 trillion as of the end of 2024, only N2.8 trillion has so far been officially verified through auditing. He added that as reconciliation continues, the final amount is still expected to settle around N4 trillion, not the higher figures being mentioned by GenCos.

He also revealed that more than 60 percent of the debt is tied to gas supply. Gas is a key component used by power plants to generate electricity, and unpaid gas bills have significantly contributed to the overall debt burden. The minister apologised to Nigerians for the continued power outages across the country, admitting that the financial challenges in the sector are part of the reason for unstable electricity supply.

However, GenCos have rejected the government’s position, saying the figures presented are incomplete and not transparent. The Executive Secretary of the Association of Power Generation Companies, Joy Ogaji, stressed that any accurate figure must come from a joint reconciliation process involving all stakeholders in the power sector.

Ogaji pointed out that the last time all parties met to reconcile the debt was in March 2025, and no fresh meeting has been held since then. She criticised the reliance on the Nigerian Bulk Electricity Trading Plc (NBET) alone, explaining that NBET does not handle all aspects of payments and cannot provide a complete picture of what is owed.

According to her, GenCos’ claims cover a wide range of outstanding payments. These include unpaid invoices for electricity generated since 2015, capacity payments for available but unused power, and deemed capacity charges. Other claims involve foreign exchange losses, interest on unpaid debts calculated at NIBOR plus four percent, and Value Added Tax (VAT) on gas supplied between 2013 and 2021.

She further explained that power plants often incur extra costs due to frequent start-ups and shutdowns, which affect operations and efficiency. GenCos are also seeking compensation for providing additional services such as spinning reserve and black start—services that help stabilise the national grid during disruptions.

In addition, operating under conditions like Free Governor Mode, which is used to maintain grid stability, causes faster wear and tear on equipment. GenCos argue that these costs are significant and have not been properly accounted for in the government’s assessment.

The dispute is happening at a time when the Federal Government is trying to reform the electricity sector by clearing old debts, improving transparency, and making the market more financially stable. An earlier audit had already confirmed N2.8 trillion as part of the legacy debt, but disagreements over other components continue to create tension.

Industry experts warn that if the issue is not resolved quickly, it could discourage investors and worsen the already fragile power supply situation in the country. They say a clear and transparent agreement on the actual debt is necessary to restore confidence and ensure long-term improvements in electricity generation and distribution.

Despite the disagreement, both the government and GenCos have expressed willingness to continue discussions.

They agree that proper and transparent reconciliation of the debt is essential to fixing the deep-rooted challenges in Nigeria’s electricity sector and ensuring better service delivery to Nigerians.