Nigeria is on the verge of a nationwide electricity blackout after the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) directed gas producers to halt supplies to power generation companies (GenCos) over unpaid debts totalling more than N2 trillion.
In a statement shared on its official social media account, the Nigerian National Grid confirmed that the directive stems from the inability of gas producers to sustain operations due to the substantial debts owed by the Federal Government and some GenCos.
Mounting Debt Crisis in Nigeria’s Power Sector
The N2 trillion debt crisis has plagued Nigeria’s power sector, stifling progress despite several government interventions. Power generation companies have repeatedly called for urgent payments to avoid jeopardising their operations and the country’s electricity supply.
In June 2024, GenCos warned the Federal Government that the non-payment of these debts could destabilise electricity generation nationwide. The concerns have persisted, with gas producers now taking a firm stance to halt supply until the debts are addressed.
Although the Federal Government has made efforts to clear some of its outstanding payments, these measures have not been enough to stabilise the power sector. For instance:
- In May 2024, the government allocated N130 billion to partially settle debts in the Nigerian Electricity Supply Industry (NESI).
- By August 2024, the Minister of Power, Adebayo Adelabu, announced the payment of N205 billion out of the N1.3 trillion owed to GenCos as part of ongoing efforts to increase liquidity in the sector.
However, these payments represent only a fraction of the total debt burden, leaving gas producers and GenCos struggling to maintain operations.
Call for Timely Payments
The NMDPRA has urged gas off-takers, especially power generation companies, to ensure prompt payment for gas supplied. The regulatory body highlighted that delayed payments not only undermine the producers’ ability to operate but also threaten the stability of Nigeria’s energy ecosystem.
“An electricity blackout is imminent if this issue is not resolved promptly,” NMDPRA stated. It stressed the need for coordinated efforts to address the liquidity crisis and ensure that the power sector remains functional.
Nigeria’s Struggling Power Sector
The halt in gas supply is yet another setback for a power sector already battling underinvestment and financial instability. Despite billions of naira in investments and policy reforms, Nigeria’s electricity supply remains unreliable, with frequent blackouts and limited grid expansion.
Experts have pointed out that resolving the debt crisis is critical to achieving sustainability in electricity generation and distribution. Gas producers, which supply about 70% of the fuel used by GenCos, are central to the sector’s survival.
Broader Implications
The current situation has far-reaching implications for Nigerians, businesses, and the economy.
- Industries and households: Many depend on grid electricity for daily operations, and a blackout would force a reliance on more expensive and environmentally harmful diesel generators.
- Economic growth: Power shortages could hamper production across key sectors, affecting employment and revenue generation.
- Environmental impact: Increased reliance on fossil fuels like diesel could worsen air pollution and Nigeria’s carbon footprint.
The power sector’s challenges underscore the need for deeper structural reforms and private-sector participation. Without addressing the underlying issues of debt, inefficiency, and underinvestment, Nigeria’s energy crisis is unlikely to improve.
Urgent Steps Needed
To avert a total collapse of the power grid, experts are calling for immediate action:
- Debt repayment: The Federal Government must prioritise clearing outstanding debts to gas producers and GenCos.
- Policy reforms: Implementing policies that ensure timely payments and improved governance in the power sector is essential.
- Infrastructure investment: Expanding and modernising the power grid can help address long-term supply challenges.
As the NMDPRA’s directive takes effect, the government and industry stakeholders face mounting pressure to resolve the crisis. With electricity generation now hanging by a thread, urgent solutions are needed to prevent a nationwide blackout.
