Power Generation Companies Threaten Shutdown Over N4 Trillion Debt
The Association of Power Generation Companies (APGC) in Nigeria has raised concerns about a potential shutdown of power generation plants due to unpaid invoices totaling over ₦4 trillion is a dire warning that highlights the deep-seated liquidity crisis plaguing the country’s power sector.
The breakdown of the debt, with ₦2 trillion attributed to power supplied in 2024 and ₦1.9 trillion in legacy debts, underscores the long-standing nature of the issue and the urgent need for intervention.
The impact of this crisis on power generation companies (GenCos) is multifaceted and severe. With plants receiving less than 30% of their monthly invoices, GenCos are facing significant challenges in meeting their financial obligations. This includes payments for gas supplies, which are essential for the operation of the plants, as well as other operational costs such as maintenance, personnel, and equipment. The inability to cover these costs not only jeopardizes the continuous operation of the plants but also threatens the overall sustainability of the power generation sector.
The call by the APGC for urgent action to address this crisis is well-founded and critical. The proposed solutions, including immediate payment plans, prioritizing full invoice payments, and implementing transparent billing and remittance processes, are aimed at stabilizing the sector and preventing a collapse that could have far-reaching consequences for Nigeria’s already unstable electricity supply.
Immediate payment plans are essential to provide GenCos with the necessary financial relief to cover their operational costs and prevent a shutdown of the plants. This could involve the Nigerian government or relevant authorities, such as the Nigerian Bulk Electricity Trading Plc (NBET), working out a payment schedule with GenCos to clear the outstanding debts. Prioritizing full invoice payments is also crucial to ensure that GenCos receive the full amount for the power they supply, rather than the less than 30% they are currently receiving.
Implementing transparent billing and remittance processes is another critical step towards addressing the liquidity crisis. This would involve putting in place a system that ensures accurate and timely billing, as well as prompt remittance of payments to GenCos. Such a system would help to build trust and confidence among stakeholders, including GenCos, the government, and consumers, and would go a long way in preventing future disputes and liquidity crises.
The potential consequences of inaction are dire. A shutdown of power generation plants would exacerbate Nigeria’s already unstable electricity supply, leading to widespread power outages and disruptions to economic activities. This would have a devastating impact on businesses, industries, and households, and would undermine the country’s efforts to promote economic growth and development.
The APGC’s warning about a potential shutdown of power generation plants due to unpaid invoices is a clarion call for urgent action. The Nigerian government and relevant authorities must take immediate steps to address the liquidity crisis, including implementing payment plans, prioritizing full invoice payments, and introducing transparent billing and remittance processes. Failure to do so would have severe consequences for the power sector, the economy, and the country as a whole. It is imperative that stakeholders work together to find a solution to this crisis and ensure a stable and reliable electricity supply for Nigeria.
