A fresh confrontation is brewing in Nigeria’s electricity sector as the Nigeria Labour Congress (NLC) and power generation companies (GENCOs) take opposing positions over a reported ₦6 trillion debt owed to generators and a proposed ₦3 trillion federal bailout to stabilise the struggling industry.
At the centre of the dispute is the mounting liquidity crisis in the power market, where generation companies say they have supplied electricity for years without full payment due to tariff shortfalls, subsidy gaps and distribution losses across the value chain.
Debt claims and bailout push
GENCOs, under the Association of Power Generation Companies (APGC), maintain that they are owed about ₦6 trillion in unpaid invoices and market shortfalls accumulated since the 2013 privatisation of the power sector. Industry figures indicate the debt includes roughly ₦2 trillion in legacy obligations from 2015–2020, about ₦1.9 trillion for power supplied between 2021 and 2023, and more than ₦2 trillion in recent shortfalls and foreign-exchange losses tied to gas supply and maintenance contracts.
The companies warn the debt burden has severely constrained their ability to purchase gas, service bank loans and maintain turbines, raising fears of plant shutdowns and further grid instability. Nigeria’s available generation has hovered around 4,000–5,000 megawatts against estimated demand exceeding 20,000MW, with repeated grid collapses in recent years.
To avert a deeper crisis, the Federal Government is said to be considering a ₦3 trillion intervention package that would partly clear legacy debts and provide payment guarantees to generators going forward. Policy discussions suggest the bailout could combine cash payments with promissory notes or bonds, alongside market reforms aimed at improving cost recovery.
Such intervention would follow earlier support schemes, including the ₦213 billion and ₦701 billion payment assurance facilities introduced between 2017 and 2021 to keep generation companies solvent amid persistent revenue shortfalls from distribution companies (DisCos).
Labour opposition
The NLC, however, has strongly opposed the proposed bailout, describing it as a transfer of public funds to private investors who acquired generation assets during the 2013 privatisation. Labour leaders argue that GENCOs, as commercial entities, should bear business risks rather than rely on repeated government support.
The union also fears the bailout conditions would trigger fresh electricity tariff increases and further removal of subsidies, worsening the burden on households and businesses already grappling with inflation and high energy costs. Tariffs for Band A customers — those promised at least 20 hours of supply daily — were sharply raised in 2024, sparking widespread public backlash.
NLC officials insist any financial rescue must be preceded by a comprehensive audit of GENCO finances and the privatisation agreements to determine whether operators have met investment and performance obligations. Labour maintains that Nigerians should not pay higher tariffs for what it describes as unreliable supply and frequent outages.
GENCOs’ defence
Generation companies reject Labour’s position, arguing that the electricity market is heavily regulated and tariffs remain below cost-reflective levels set by government policy. They say they are compelled to generate power and sell to the bulk trader at prices that do not cover fuel, maintenance and financing costs, leaving them dependent on government subsidy payments that have not been fully honoured.
Industry executives warn that without urgent settlement of debts or credible payment guarantees, some plants may be forced offline due to gas supply cut-offs and equipment deterioration. They caution that generation could fall below 3,000MW, heightening the risk of nationwide blackouts and economic disruption.
Structural crisis
Analysts note that the clash reflects deeper structural problems in the post-privatisation electricity market. Distribution companies reportedly collect only about 60–70 per cent of billed revenue due to technical losses, energy theft and weak metering, creating a chronic liquidity gap estimated at over ₦1 trillion annually. Because DisCos cannot fully remit payments, the Nigerian Bulk Electricity Trading Plc (NBET) and market operator fail to settle GENCO invoices, causing debt to accumulate across the sector.
At the same time, politically sensitive tariffs have remained below cost-reflective levels for most consumers, leaving government to bridge the difference through subsidies that are often delayed or underfunded. Exchange-rate depreciation has further inflated the naira value of gas contracts and foreign-denominated loans owed by generators.
High-stakes negotiations
The dispute comes amid broader tensions between organised labour and the Federal Government following recent battles over fuel subsidy removal, minimum wage adjustments and electricity tariffs. Labour leaders have previously threatened nationwide strikes over power-sector reforms perceived as anti-consumer.
Energy policy insiders say the government is weighing options including partial debt securitisation, phased tariff adjustments and renegotiation of power-purchase agreements to restore market viability without triggering social unrest.
With Nigeria’s grid still fragile and electricity supply far below national demand, the outcome of the NLC–GENCO standoff is expected to shape the next phase of power-sector reforms and determine whether the country can stabilise generation or face renewed supply shocks in the months ahead.
Abuja Network News
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