Nigeria’s power sector faces a deepening financial crisis that could push the Federal Government’s liabilities to about N6.2 trillion by the end of 2025, amid the rapid exit of premium customers from the national grid.
The government is already struggling with a N4 trillion legacy debt to generation companies (GenCos), while new arrears have risen to N1.6 trillion as of August 2025 and are projected to hit N2.2 trillion by December. As of today, the total liabilities stand at N5.6 trillion.
Sources at the Nigerian Electricity Regulatory Commission (NERC) said the share of commercial customers still relying on the grid has dropped to 13 per cent, down from 20 per cent, as grid unreliability and rising costs drive migration to alternative energy.
Manufacturers spent a record N1 trillion on self-generation in 2024, while premium households are increasingly turning to solar.
In 2024 alone, NERC licensed 24 bulk consumers to generate their own power and another 22 for off-grid projects, both adding about 289 megawatts of capacity outside the national grid.
In 2025 alone, Jigawa, Zamfara, Lagos, Delta, and Katsina already signed renewable energy deals while the Federal Government plans to remove its agencies from the grid, leaving the national grid with households without capacity for solar or businesses without gas-fired plants.
With the exit, the government faces about N200 billion tariff shortfall monthly, as the current administration has been unable to keep to promises on the frozen electricity tariff.
Despite repeated assurances, industry players fear the government lacks a clear strategy to settle GenCos’ debts, with interventions from President Bola Tinubu and Finance Minister Wale Edun seen largely as efforts to ease tensions rather than provide a sustainable solution.
Investigations by The Newsmen also revealed that the financial burden on the market could rise by an additional N1.059 trillion yearly to prevent the national grid from collapsing. Otherwise, enforcing the Nigerian Electricity Regulatory Commission’s (NERC) newly released order on compulsory Free Governor Control (FGC) across all power plants may remain unachievable.
With commercial customers on the national grid shrinking to a mere 13 per cent, as manufacturing companies increasingly switch to alternative energy and premium end-users migrate to solar, stakeholders warn that fresh liquidity and capacity crises are looming in the sector.
While Edun publicly told Nigerians early in August that the government had already moved into implementation to clear the legacy debt, he could not put a timeline or a definite plan on how the Federal Government intends to refinance the debt.
Though the Federal Government is considering promissory notes to pay the GenCos, the Debt Management Office (DMO) has only provided N800 billion window for 2025, as this amount covers all Federal Government creditors, including Dangote, state governments, and Julius Berger, making it grossly inadequate, even if fully allocated to GenCos.
In the 2025 Appropriation law, only N900 billion was allocated to electricity subsidies amid concerns about its adequacy to cover arrears and future deficits at a time the subsidy burden is averaging N2 trillion yearly.
On August 30, The Newsmen requested a clear plan on the debt payment from the Director, Press and Public Relations at the Ministry of Finance, Mohammed Danjuma Manga, who responded eight minutes after the request was forwarded for an answer.
The next day, Special Adviser (SA) on Communications, Media, and Publicity to Edun, Dr. Ogho Okiti, contacted The Guardian, asked for clarity on the question, but never responded to the question.
He was reminded by 12:37pm on Monday, 1st September and responded by 3:04pm the same day with “Sure, I’m on it.”Meanwhile, stakeholders yesterday told The Newsmen that enforcement of NERC’s FGC, which would mandate all GenCos to control the national grid from collapsing, may cause additional N1.059 trillion in liability.