Nigeria’s electricity sector is facing renewed financial strain as the Senate revealed that the Federal Government’s debt to power generation and distribution companies has soared by N800 billion.
The Senate Committee on Power disclosed the alarming figure during a recent investigative session, expressing concern over the growing liabilities, which now threaten the stability of the already fragile energy sector. Lawmakers warned that the rising debt burden could further discourage investment and worsen the country’s electricity supply crisis.
Chairman of the Committee, Senator Enyinnaya Abaribe, described the situation as “untenable and unsustainable,” noting that key players in the power sector are struggling to stay afloat due to delayed payments and financial uncertainty.
“This level of indebtedness is choking the sector. Power generation companies are owed, distribution companies are not meeting their remittance obligations, and the transmission infrastructure is underfunded,” Abaribe stated. “We cannot talk about reliable power supply when debts of this magnitude are hanging over the system.”
According to the committee, the bulk of the debt is owed to generation companies (GenCos) for electricity supplied to the national grid and not fully paid for by the Nigerian Bulk Electricity Trading Company (NBET), which is backed by the government.
Power sector stakeholders have long complained about the poor liquidity in the value chain, citing huge unpaid invoices, low tariff recovery, energy theft, and inadequate government support as major hindrances to sustainability.
Industry experts say the ballooning debt could lead to further reduction in power generation if GenCos are forced to scale back operations due to lack of funds for gas supply, maintenance, and capacity expansion.
The Senate has urged the Ministry of Power and the Ministry of Finance to urgently reconcile the debt and present a clear plan for settlement. Lawmakers also called for a review of the current power sector structure to ensure transparency, accountability, and financial viability.
As Nigerians continue to grapple with frequent blackouts and rising electricity costs, the revelation has intensified calls for a comprehensive overhaul of the sector to ensure reliable power supply and economic growth.
