FG Pays N71bn of N1.92trn Power Debt as Electricity Crisis Deepens in Nigeria
- The federal government paid only 3.7 per cent of its N1.92 trillion subsidy debt to GenCos in 2025
- Delayed payments have affected gas supply and electricity generation, causing poor electricity supply
- Power-generating companies lost N36.03 billion to stranded electricity due to transmission constraints
Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology, and macroeconomic trends in Nigeria.
The federal government has paid N71.49 billion out of the N1.92 trillion owed to electricity generation companies (GenCos) in 2025, according to documents from the Nigerian Electricity Regulatory Commission.
The payment represents about 3.7 per cent of the total subsidy obligation, highlighting ongoing funding gaps in the power sector amid persistent electricity shortages nationwide.
Source: Getty Images
Subsidy shortfall affects power generation
The report indicates that delays in subsidy payments have contributed to reduced gas supply to GenCos, which rely on gas to generate electricity.
According to industry sources cited by Daily Trust, GenCos have struggled to meet obligations to gas suppliers, limiting their ability to produce sufficient electricity.
The subsidy regime exists to cover the gap between cost-reflective tariffs and what consumers are charged. This gap is managed through payments tied to the DisCos’ remittance obligations to the Nigerian Bulk Electricity Trading Plc.
DisCos record high remittance rate
Despite the challenges, electricity distribution companies (DisCos) reportedly paid 93.8 per cent of the N1.23 trillion billed to them in 2025.
They remitted N1.16 trillion, leaving an outstanding balance of N71.49 billion.
Overall, GenCos issued invoices totalling N3.16 trillion during the year, but only N1.24 trillion was paid, leaving a deficit of N1.92 trillion.
Breakdown of government payments
Data from the Nigerian Electricity Regulatory Commission shows that no subsidy payments were made in the first quarter of 2025, despite an obligation of N536.4 billion.
In the second quarter, the government paid N76.95 billion out of N514.36 billion billed, while no payments were made in the third and fourth quarters.
For January 2026, a bill of N126.48 billion remains unpaid.
The regulator noted that most of the outstanding amount (about N1.85 trillion) is due to unfunded tariff shortfalls rather than market inefficiencies.
GenCos record losses from stranded electricity
Meanwhile, power generation companies reported losses of N36.03 billion in the first two months of 2026 due to stranded electricity.
The losses were attributed to transmission constraints that prevented generated power from being evacuated and distributed.
In January, about 2,985MW of electricity was stranded, resulting in a loss of N18.1 billion.
In February, stranded generation rose to 3,274MW, with losses estimated at N17.93 billion.
These figures highlight persistent weaknesses in Nigeria’s transmission infrastructure, despite available generation capacity.
Source: Getty Images
FG moves to address sector liquidity
In response, the federal government has initiated a N501.02 billion bond issuance aimed at improving liquidity in the power sector.
According to a statement by Bolaji Tunji, spokesperson to the Minister of Power, the bond is part of a broader N4 trillion Presidential Power Sector Debt Reduction Programme approved by President Bola Tinubu.
The intervention is being executed through Nigerian Bulk Electricity Trading Plc (NBET).
Tunji said the initiative is designed to address longstanding revenue shortfalls caused by non-cost-reflective tariffs and underfunded subsidies.
“The bond proceeds are expected to settle legacy debts, restore gas supply, and enable improved plant maintenance,” he stated.
GenCos yet to receive funds months after FG’s N501bn bond
Legit.ng earlier reported that GenCos said they have not received any payments from the federal government.
This is despite the N501bn bond issued by the government to clear about N4tn owed to GenCos.
Industry stakeholders warn that the delay could worsen financial pressure on power operators
Source: Legit.ng
