Over ₦6.2 trillion in unpaid invoices and the non-recognition of capacity payments are pushing the sector toward collapse,the Association of Power Generation Companies (APGC), has said
Its Chief Executive Officer (CEO), Joy Ogaji, said the current market design under the Nigerian Electricity Supply Industry (NESI) is undermining investor confidence, breaching contractual agreements, and threatening long-term energy security.
According to her, while the generating companies contractually obligated to make capacity available for dispatch
under the Power Purchase Agreements (PPAs), the market only pays for electricity taken by distribution companies and wheeled by transmission.
The practice has removed available capacity from commercial consideration, discouraging investments in recovering mechanically unavailable capacity estimated at about 7,000 megawatts of the Nigeria’s 15,500MW installed grid capacity, she lamented.
She explained that under standard PPAs approved by the Nigerian Electricity Regulatory Commission (NERC), payments are structured around multiple components, including available capacity, nominated capacity, metered energy and deemed capacity.
These are fundament contractual obligations that cannot be selectively ignored without destabilising the market, she said, adding that generators are required to declare their Net Dependable Capacity daily, which forms the basis for dispatch allocations to distribution companies.
She said generators incur fixed costs — fuel procurement, labour, operations and maintenance — in readiness to produce power.
She maintained that denying capacity payments despite these commitments, sends a wrong signal to both domestic and international investors.
She also expressed concern over claims by the Nigerian Bulk Electricity Trading Plc (NBET) that only five active PPAs exist in the market, stressing that without enforceable PPAs, they argue, power plants lack the contractual security required to secure gas supply agreements or long-term financing.
She hinted that the absence of active PPAs, exposes generators to downstream inefficiencies, including load rejection by transmission and distribution companies, poor revenue collection by DisCos, and chronic liquidity shortfalls.
She disclosed that since the 2013 privatisation, they have been paid only about 35 per cent of their invoices, leaving the remainder to accumulate as unpaid obligations. They insist that the ₦6.2 trillion outstanding does not even represent their full contractual entitlement.
She warned that the liquidity crisis has rendered many generation companies technically insolvent. Gas suppliers are also reportedly unpaid, compounding the sector’s fragility.
She argued that the current arrangement contradicts the principles of the Multi-Year Tariff Order (MYTO), Nigeria’s incentive-based regulatory framework designed to ensure cost recovery and reward efficiency.
She said instead of incentivising capacity expansion, they say, the market penalises generators while shielding inefficiencies elsewhere in the value chain.
Dismissing allegations of inflated invoicing, she explained that metered data is obtained and validated hourly by the Market Operator and System Operator under strict settlement procedures, including preliminary and final settlement statements that allow for objections and verification.
She said electricity generation is capital-intensive and requires long-term investment recovery. Operating the sector on what they
She said:“GenCos are not beneficiaries of the current subsidy regime.They are its biggest victims.”
Nigeria’s power growth ambitions will remain stunted unless contractual sanctity is restored, capacity payments recognised, and market bottlenecks addressed, she added.
