Nigeria's Power Sector Faces N17.1tn Debt Crisis by 2033, Gencos Warn

The Association of Power Generation Companies (APGC) has sounded the alarm over Nigeria's power sector, warning that the industry's debt could skyrocket to approximately N17.11 trillion by 2033. This dire prediction comes despite the federal government's efforts to mitigate the situation through the Presidential Power Sector Debt Reduction Programme (PPSDRP). As of June 2026, the debt owed to Generation Companies (Gencos) had already risen to about N7.66 trillion. The APGC's analysis revealed that the N501 billion Series 1 bond, part of the government's intervention, only addresses a fraction of the industry's mounting liabilities, covering a mere 7.37 per cent of the N6.8 trillion legacy debt accumulated between 2015 and 2024. Furthermore, even with 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 a substantial N5.07 trillion uncovered. The root of the problem, according to the APGC, lies in the fact that Gencos are not receiving full payment for the electricity they supply to the national grid. Data from the Nigerian Bulk Electricity Trading (NBET) market, covering the period from January to April 2026, showed that while Gencos invoiced an average of N213.5 billion monthly, they received only about N90.8 billion, resulting in an average settlement rate of 42.52 per cent. This payment gap translates to an average monthly revenue shortfall of N122.7 billion. Unless this issue is resolved, the APGC warned that new debts will continue to accumulate, potentially overwhelming the current debt resolution programme. The association projected that the industry's total debt could escalate from N8.27 trillion in 2026 to N17.11 trillion by 2033, following a trajectory that sees the debt rise to N9.75 trillion in 2027, N11.22 trillion in 2028, N12.69 trillion in 2029, N14.16 trillion in 2030, and N15.63 trillion in 2031. The APGC also highlighted the significant cost of servicing the bond series, with the Series 1 bond requiring approximately N888 billion in total repayments over seven years, including N387 billion in interest. Similarly, the proposed Series 2 bond of N1.23 trillion 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 necessitate total repayments of about N3.07 trillion over seven years. The APGC emphasized that while the debt resolution programme offers much-needed liquidity relief, it does not address the underlying structural weaknesses responsible for the market's recurring financial deficits. The association pointed to an outstanding tariff shortfall of about N1.783 trillion recorded between April 2025 and April 2026 as evidence that electricity tariffs remain below the actual cost of supplying power. To address these issues, the APGC recommended a multifaceted approach, including the implementation of cost-reflective tariffs, transparent billing and collection mechanisms, fully funded subsidies where the government chooses to intervene, stronger enforcement of market performance obligations, and the full implementation of the existing N4 trillion PPSDRP framework. The association stressed that resolving Nigeria's electricity market crisis will require coordinated action by the government, regulators, market operators, and investors to eliminate the recurring monthly payment shortfall and restore the financial sustainability of the power sector.