President Tinubu Engages GenCos To Address N4 Trillion Electricity Debt Crisis

President Bola Tinubu is set to engage in high-level discussions with Nigeria’s power generation companies (GenCos) to tackle the escalating N4 trillion debt threatening the nation’s electricity supply chain.

This initiative follows a recent meeting between Minister of Power, Adebayo Adelabu, and GenCos’ chairpersons in Abuja. The discussions were prompted by growing concerns over potential national grid failures due to liquidity challenges in the power sector.

The Federal Government has committed to immediate actions aimed at reducing the substantial debt owed to GenCos. The companies have reported being owed N2 trillion for electricity supplied in 2024, in addition to N1.9 trillion in legacy debts.

Bolaji Tunji, Special Adviser on Strategic Communications and Media Relations to the Minister, stated that the government plans to settle a significant portion of the debt promptly. The remaining balance is expected to be addressed through financial instruments like promissory notes within the next six months.

Minister Adelabu emphasized the urgency of the situation, highlighting the government’s determination to prevent a collapse of the power sector. He described the scenario as a national emergency requiring swift intervention.

The GenCos, led by Col. Sani Bello (retd), Chairman of Mainstream Energy Solutions and head of the Association of Power Generating Companies, have warned that the sector faces imminent collapse due to mounting debts and liquidity issues. Bello pointed out that the financial strain has severely limited their operational capabilities and access to necessary funding for maintenance and infrastructure upgrades.

Kola Adesina, Chairman of Egbin Power and First Independent Power Limited, echoed these concerns, stating that the stability of the power sector is crucial for the functioning of industries, homes, and essential services like hospitals.

Minister Adelabu acknowledged systemic failures and policy inconsistencies as contributing factors to the sector’s challenges. He advocated for comprehensive reforms, including the liberalization of the electricity market and the implementation of cost-reflective tariffs. Adelabu stressed that while subsidies are unsustainable in the long term, the government will continue to provide targeted support for economically disadvantaged Nigerians.

Dr. Joy Ogaji, CEO of the Association of Power Generation Companies, outlined additional challenges faced by GenCos, such as erratic gas supply, payment defaults, and foreign exchange volatility. She noted that the significant depreciation of the naira has adversely affected maintenance budgets and loan repayments.

Adelabu revealed that regulatory reforms are underway to enhance market stability and reduce levies. He called on GenCos to collaborate with the government in raising public awareness about electricity consumption, efficient usage, and the realities of tariff structures.