The Federal Government’s (FG) attempts to settle debts owed to electricity generation companies (GenCos) may be encountering more difficulties as the debt load increased from N4 trillion at the start of 2025 to N6.5 trillion at the end of the year, a 62.5% increase.

The government had flagged off the funding program through the issuance of the N590 billion Series 1 Power Sector Bond in mid-December 2025, as part of a plan to raise N1.23 trillion by the end of the first quarter of 2026 to improve system liquidity in 2026.

The power sector has been shackled in decades by huge debts which hampered investment in critical infrastructure needed to boost power supply in the country.

However, the first part issuance, comprising N300 billion Tranche A and N290 billion Tranche B, has raised concerns over transparency and the overall performance of the sector liquidity.

Plants receive N547bn for N1.531trn invoices in 6 months

The data, covering six payment cycles from May to October 2025, revealed that 25 generation companies issued invoices totalling N1.531 trillion for power supplied to the grid but received only N547.369 billion, representing 35.74 per cent. The balance of N984.3 billion is expected to be paid by the government as electricity subsidies.

A breakdown of the figures showed that GenCos issued invoices of N282.139 billion in May and received N96.402 billion (34.17 per cent). In June, invoices amounted to N257.261 billion, while payments stood at N91.357 billion (35.51 per cent). July invoices totalled N267.999 billion, with payments of N96.287 billion (35.93 per cent). In August, GenCos invoiced N245.956 billion and received N88.593 billion. For September and October, invoices were N226.665 billion and N251.649 billion, while payments were N81.783 billion (36.08 percent) and N92.947 billion (36.94 percent), respectively.

In 2024, the Nigerian Electricity Regulatory Commission (NERC) introduced the DisCos Remittance Obligation (DRO), which requires electricity distribution companies (DisCos) to remit about 40 per cent of invoices received from the Nigerian Bulk Electricity Trading (NBET) Plc for power taken from the national grid. (Vanguard)