Nigerian Electricity Supply Industry Faces Ongoing Financial Crisis

By Abass Ganiyu

The Nigerian Electricity Supply Industry (NESI) continues to grapple with a severe financial crisis as electricity distribution companies (DisCos) remitted only N21.95 billion (9.33%) out of the N235.09 billion worth of electricity they received from the National Grid in March 2024. Despite collecting N100.44 billion in revenue, DisCos paid just N17.238 billion to power generation companies (GenCos) and N4.72 billion to gas suppliers.

The Nigerian Electricity Regulatory Commission (NERC) had set the DisCos' remittance obligation at 9.47%, leaving the government to cover the remaining 90.53%, a responsibility it has not fulfilled. With the Federal Government failing to release any of the N450 billion electricity subsidy for 2024, the sector faces a mounting debt crisis, with GenCos owed N3.7 trillion.
Col. Sani Bello (Rtd), GenCos’ Board Chairman, highlighted the dire consequences of this liquidity crisis, including stalled investments and potential nationwide power shortages. Energy expert Lanre Elatuyi warned that the current financing model is unsustainable and could lead to a complete collapse of the industry.

The financial strain has resulted in GenCos being deprioritized in payments and struggling to maintain operations, impacting Nigeria's overall electricity generation capacity. The ongoing crisis underscores the urgent need for a sustainable financial model to avert a total industry breakdown.

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