N5.6trn debt: Fears of blackout as gas firms cut supply to power plants

Nigeria’s fragile electricity sector faces fresh turmoil as gas suppliers begin cutting deliveries to power plants over a ballooning N5.6 trillion debt owed to power generation companies (GenCos).

The cutback, confirmed on Thursday by the Managing Director of the Association of Power Generation Companies, Dr. Joy Ogaji, has raised fears of nationwide blackouts at a time the economy is already under strain.

Her warning came just two days after another national grid collapse plunged the entire country into darkness. Although about 4,000 megawatts have since been restored, many plants remain crippled by inadequate gas supply.

Ogaji disclosed that from January to August 2025 alone, an additional N1.6 trillion was added to the sector’s debt, bringing total arrears to N5.6 trillion. “Gas suppliers have already started reducing supply. There are critical maintenance works on our machines, spares to purchase, and other creditors who are no longer willing to wait for payments,” she said.

The crisis persists despite President Bola Tinubu’s July 25 meeting with GenCos, where he acknowledged a N4 trillion outstanding liability covering legacy debts and unpaid invoices. At the time, Tinubu appealed for patience, pledging a N4 trillion bond programme to ease the liquidity crunch.

“Almost two months after that meeting, there has been no follow-up engagement with the GenCos on how these debts will be settled,” Ogaji lamented.

She explained that about 60 percent of GenCos’ revenues are used to pay gas producers, making it difficult to sustain generation when payments are in arrears. Without urgent government action, she warned, the electricity market could “grind to a halt.”

Industry operators say the worsening cash squeeze threatens not just gas supply, but also machine maintenance, spare parts procurement and servicing of other creditors. “Despite our commitment to keeping the lights on, the situation has gone beyond our control,” Ogaji stressed.