Nigeria’s energy debt is causing a collapse of the power sector, halting gas supply and generation, and affecting millions.
ABUJA — Nigeria’s power plants plunged deeper into crisis this week as multiple gas-fired generation grid shut down indefinitely, citing an unpaid debt of ₦6.8 trillion owed across the electricity value chain.
The shutdown, announced Monday by the Association of Power Generation Companies (APGC), affects millions of Nigerians already enduring less than 12 hours of electricity daily.
Officials warn that without immediate government intervention, the blackout could become permanent for many communities.
The crisis deepened after gas suppliers, primarily the Nigerian National Petroleum Company Limited (NNPC) and independent producers, suspended fuel supply to at least nine major generation plants.
Gas companies say they are collectively owed over ₦2.1 trillion, making continued supply commercially unsustainable. Several generating companies confirmed they received final disconnection notices over the past 72 hours.
“We have exhausted every avenue for dialogue. Our members cannot fund power generation with debt. The entire sector is technically insolvent.”
— Joy Ogaji, Executive Secretary, Association of Power Generation Companies (APGC)
Nigeria’s electricity sector has struggled structurally since it was privatized in 2013. However, the current debt spiral across generation, transmission, and distribution represents the worst liquidity crisis in the sector’s history.
The Transmission Company of Nigeria (TCN) and eleven distribution companies (DisCos) owe generation firms a combined ₦4.7 trillion, according to data from the Nigerian Electricity Regulatory Commission (NERC).
Meanwhile, DisCos blame their inability to pay on millions of unmetered customers and chronic electricity theft.
The human cost is already severe. In Lagos, Nigeria’s commercial capital, businesses report running generators for up to 22 hours per day, with diesel costs consuming 30–40% of operating expenses.
Small and medium enterprises (SMEs), which account for 48% of GDP, face an existential threat. Hospitals, schools, and water treatment plants across Kano, Enugu, and Port Harcourt report critical power shortfalls.
“We run our bakery on a generator from 4 am to 10 pm every single day. The cost has doubled in six months. We are at the edge.”
— Adaeze Nwosu, SME owner, Surulere, Lagos
The federal government has acknowledged the crisis. The Ministry of Power on Tuesday convened an emergency stakeholder meeting, promising a “comprehensive debt recovery roadmap” by month’s end.
President Tinubu’s spokesperson confirmed that the Presidential Power Initiative is exploring emergency bridge financing of up to ₦500 billion to stabilize the sector.
However, industry analysts remain skeptical, pointing to a history of unfulfilled government commitments to the sector.
Dr. Emeka Eze, an energy economist from the University of Lagos, cautions that merely patching the debt without implementing systemic reform would be akin to “putting plaster on a severed artery.”
He argues that cost-reflective tariffs, long resisted by regulators over fears of public unrest, are the only sustainable path.
Nigeria currently charges consumers an average of ₦57 per kilowatt-hour (kWh), compared to a generation cost of over ₦120/kWh, creating a structural deficit with every unit of electricity sold.
“The math has never worked. Nigeria sells electricity below the cost of producing it. Until that changes, no bailout will hold.”
— Dr. Emeka Eze, Energy Economist, University of Lagos
With negotiations ongoing and gas suppliers maintaining their suspension, Nigeria faces a defining moment in its energy history.
The next 30 days, and the government’s willingness to implement difficult but necessary reforms, will determine whether the lights come back on. The stakes for 220 million Nigerians could not be more significant.
