GenCos Raises Alarm Over Exclusion from FG’s N4trn Debt Verification Process

The Association of Power Generation Companies (GenCos) has raised concerns over their exclusion from the Federal Government’s ongoing debt verification and reconciliation process, which seeks to address the N4tn owed to generation companies in the Nigerian Electricity Supply Industry.

In a letter dated September 24, 2025, and signed by its Chief Executive Officer, Dr. Joy Ogaji, the APGC said the inter-ministerial committee constituted to reconcile the debts owed to power producers does not adequately capture the role of the GenCos, who are the direct counterparties and creditors.

The letter, addressed to the Acting Managing Director of the Nigerian Bulk Electricity Trading Plc (NBET) Mr. Johnson Akinnawo, was in response to an earlier correspondence (Ref: NB/002574, dated September 17, 2025) in which NBET assured stakeholders that the Federal Government was fast-tracking a proposed bond issuance to tackle liquidity shortfalls in the power sector.

While acknowledging the government’s intervention, the GenCos insisted that their inclusion in the exercise was crucial to ensuring transparency, accuracy, and fairness in reconciling the huge debts.

They specifically sought clarification on four issues: their formal role in the reconciliation process, the mechanism for presenting supporting documentation and confirming figures, the timeline and milestones for completion, and the cut-off month for debt verification.

“While we appreciate the Federal Government’s commitment and NBET’s assurance that efforts are being fast-tracked to address the liquidity challenges within the power sector, we respectfully seek clarification on Paragraph 4 of your letter, which referenced the constitution of an Inter-Ministerial Committee mandated to carry out further verification and reconciliation of the debts owed to the GenCos.

“Our concern is that this process, as currently constituted, appears to exclude the direct participation of the GenCos, who are the actual counterparties and creditors to the debt under consideration,” the letter read in part.

Given that the objective was to ensure a comprehensive and accurate reconciliation that leads to a mutually acceptable resolution, the GenCos requested clarity on their role in the ongoing reconciliation process.

They also sought to know the mechanism by which GenCos will be engaged to provide supporting documentation, confirm figures, and participate in discussions that will ultimately determine the verified debt amounts. This also included the timeline for the conclusion of the exercise and key milestones, to enable GenCos to plan their operations effectively and align with the anticipated release of funds.

The power plant operators wanted to know the cut-off month that will be applied for the debt reconciliation so that GenCos can prepare and present accurate and up-to-date records for verification.

“As key stakeholders, we strongly believe that our inclusion in these engagements is crucial to ensuring transparency, accuracy, and speedy resolution of outstanding claims.

“We look forward to your prompt clarification and guidance on how GenCos can actively participate in this exercise in order to support the government’s commendable efforts towards restoring liquidity to the Nigerian Electricity Supply Industry,” the letter concluded.

On Wednesday, the GenCos raised fresh concerns over the worsening state of the electricity sector, warning that unless the Federal Government urgently implements coordinated reforms, the industry risks deeper deterioration with dire consequences for economic growth, investor confidence, and national development.

In a goodwill message to Nigerians marking the country’s 65th Independence anniversary, the APGC said the generation segment of the electricity value chain now stands at a “critical crossroads” due to mounting debts, operational challenges, and inadequate support.

Ogaji, who signed the statement, lamented that generation companies are under enormous financial and operational pressure. She noted that debts owed to the GenCos have risen above N5tn, largely due to the Federal Government’s inability to settle subsidy payments, which gulped over N200bn monthly.

According to her, patriotism alone cannot sustain the operators, especially as gas producers, the lifeblood of thermal power plants, are gradually withdrawing supplies and diverting gas to other markets.

The Federal Government incurred a total of N536.4bn in electricity subsidy obligations in the first quarter of 2025 alone, amid its struggles to pay over N4tn debt owed to power generation companies.

A Nigerian Electricity Regulatory Commission (NERC) report disclosed that the subsidy obligation of the government increased by N64.7bn, from N471.69bn in the last quarter of 2024 to N536.4bn in Q1 2025.

According to the Commission, the N536.4bn was 59.16 per cent of the total GenCo invoice for the quarter. NERC stated that in the absence of cost-reflective tariffs, the government undertakes to cover the resultant gap between the cost-reflective and allowed tariffs in the form of tariff subsidies.

But for ease of administration, NERC said “the subsidy is only applied to the generation cost payable by DisCos to NBET at source in the form of a DisCo’s Remittance Obligation.”

However, the Minister of Power, Adebayo Adelabu, repeatedly said that the Federal Government could not meet this obligation, leading to mounting debts across the value chain.

It was noted that gas suppliers have begun scaling down supply to power plants in protest over mounting arrears.

Ogaji noted that this trend was worsening, as gas companies are owed trillions of naira. The ripple effect, she warned, would further constrain generation capacity and deepen Nigeria’s electricity challenges.

During a recent meeting with GenCos, President Bola Tinubu reportedly acknowledged the scale of the debts but asked for time to verify claims before payment could be authorised. This cautious approach has left industry operators anxious, as the liquidity crunch continues to worsen daily.

While operators welcomed the President’s willingness to address the matter, they emphasised the urgency of decisive action to prevent further disruptions in power generation and supply.

They are also calling on the authorities concerned to carry them along in the debt verification process.

The NBET boss had yet to reply to calls and messages sent to him as of the time of filing this report.