The Federal Government of Nigeria has pledged to pay ₦2 trillion out of the ₦4 trillion debt owed to power generation companies (GenCos) by the end of 2025, aiming to prevent a potential nationwide blackout.
Key Highlights:
• Debt Breakdown: The ₦4 trillion debt comprises ₦2 trillion for electricity supplied in 2024 and ₦1.9 trillion in legacy debts accumulated over previous years.
• Payment Strategy: The government plans to settle the ₦2 trillion through a combination of budgetary allocations and the issuance of promissory notes, which GenCos can use to access immediate liquidity via financial institutions.
• Tariff Reforms: Recent tariff adjustments, particularly for high-usage consumers, have led to a 70% increase in market revenue, rising from ₦1 trillion in 2023 to ₦1.7 trillion in 2024. This has reduced the government’s electricity subsidy burden by 35%, from a projected ₦3 trillion to ₦1.94 trillion.
• Sector Challenges: Despite these efforts, Nigeria’s power sector continues to face significant challenges, including a failing grid, gas shortages, vandalism, and a crippling debt load. The country’s installed capacity is 13,000 megawatts, but typically only about a third is generated.
The government’s commitment to settling a substantial portion of the debt is seen as a critical step toward stabilizing the power sector and ensuring uninterrupted electricity supply across the nation.