Joseph Bakare
Nigeria’s electricity industry is facing excruciating legacy debt that is troubling the
Generation Companies (Gencos) who have sent a strong warning that the country’s power sector debt could rise to about N17.11 trillion by 2033.
This is possible despite the federal government’s ongoing Presidential Power Sector Debt Reduction Programme (PPSDRP).
The GenCos said this can be reversed if the structural causes of the market’s financial crisis are urgently addressed.
The warning was contained in a debt analysis and infographic released by the Association of Power Generation Companies (APGC), which argued that while the government’s bond programme is a significant intervention, it addresses only a fraction of the mounting liabilities in the Nigerian Electricity Supply Industry (NESI).
According to the report, the estimated debt owed to Gencos had risen to about N7.66 trillion as of June 2026, with the N501 billion Series 1 bond representing only 7.37 per cent of the N6.8 trillion legacy debt accumulated between 2015 and 2024.
Even after the planned issuance of the Series 2 bond, the generation companies argued that only 25.46 per cent of the outstanding obligations would be addressed, leaving about N5.07 trillion still uncovered.
The APGC noted that beyond the historical debt, the electricity market continues to accumulate fresh liabilities every month because Gencos are not receiving full payment for electricity supplied into the national grid.
Using Nigerian Bulk Electricity Trading (NBET) market data covering January to April 2026, the association stated that Gencos invoiced an average of N213.5 billion monthly but received only about N90.8 billion, translating to an average settlement rate of 42.52 per cent.
The report showed that Gencos billed N252.48 billion in January but were paid N113.21 billion, representing a settlement rate of 44.84 per cent. In February, invoices of N198.68 billion attracted payments of N79.58 billion or 40.05 per cent.
For March, invoices stood at N208.51 billion while only N86.75 billion was paid, giving a settlement rate of 41.60 per cent. In April, Gencos invoiced N194.31 billion but received N83.59 billion, representing 43.02 per cent settlement.
The figures indicated that the market recorded an average monthly revenue shortfall of N122.7 billion during the four-month period.
According to the association, unless this payment gap is eliminated, new debts will continue accumulating at a pace that could overwhelm the current debt resolution programme.
Based on the prevailing trend, the APGC projected that the industry’s total debt could rise from N8.27 trillion in 2026 to N9.75 trillion in 2027, N11.22 trillion in 2028, N12.69 trillion in 2029, N14.16 trillion in 2030, N15.63 trillion in 2031, N17.11 trillion in 2033.
The analysis further showed that servicing the two bond series would itself come at a substantial cost.
Under Series 1, a principal of N501 billion would attract about N387 billion in interest over seven years, bringing the total repayment obligation to N888 billion.
Similarly, the proposed N1.23 trillion Series 2 bond would generate about N950.6 billion in interest, resulting in total repayments of approximately N2.18 trillion over the same period. Combined, both bond series would require total repayments of about N3.07 trillion over seven years.
The APGC stressed that while the debt resolution programme provides much needed liquidity relief, it does not resolve the structural weaknesses responsible for the market’s recurring financial deficits.
It pointed to an outstanding tariff shortfall of about N1.783 trillion recorded between April 2025 and April 2026 as further evidence that electricity tariffs remain below the actual cost of supplying power.
The association argued that unless tariffs become cost reflective or the government consistently funds the subsidy component, fresh debts would continue accumulating even as existing obligations are being repaid.
It therefore recommended a combination of reforms, including cost reflective tariffs, transparent billing and collection mechanisms, fully funded subsidies where government chooses to intervene, stronger enforcement of market performance obligations, and full implementation of the existing N4 trillion PPSDRP framework.
According to the APGC, the current bond programme should be viewed as an important first step rather than a complete solution to the sector’s liquidity crisis.
It warned that by the time the seven-year bond repayment programme ends in 2033, the industry could have accumulated liabilities exceeding the debts currently being addressed if the underlying market payment imbalance remains unresolved.
The GenCos maintained that resolving Nigeria’s electricity market crisis would require coordinated action by government, regulators, market operators and investors to eliminate the recurring monthly payment shortfall and restore the financial sustainability of the power sector