The Digest:
The Association of Power Generation Companies (GenCos) has sounded a distress alarm, warning that Nigeria's power sector is on the verge of collapse due to unpaid capacity payments totalling over N6.2 trillion. According to a statement by CEO Dr Joy Ogaji, only 35% of payments for power generated and consumed since 2015 have been made. The situation has crippled investment in maintenance and expansion, leaving average grid generation stuck at 4,000MW despite installed capacity of 15,500MW. Ogaji revealed that 7,000MW of mechanically available capacity cannot be recovered due to lack of investment. The GenCos highlighted that lack of Power Purchase Agreements (PPAs), inefficient transmission and distribution, and a market design that fails to incentivise performance are major challenges. They called for urgent reforms to ensure a contract-based electricity market and sanctity of contracts, warning that "electricity requires huge investments, recouped over very long periods" and cannot operate on a voluntary basis.
Key Points:
- The N6.2trn debt threatens collapse of electricity supply across Nigeria.
- It undermines investment in generation capacity, worsening power shortages.
- Consumers face continued darkness, while GenCos struggle to stay afloat.
- This signals the systemic failure of the electricity market structure.
- The timing, with 7,000MW stranded, demands urgent intervention.
Sources: Nigerian Tribune, GenCos Statement
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