Nigeria’s power sector is facing a deepening financial crisis as the national electricity grid stands to lose approximately ₦5.6 trillion in revenue by the end of 2025.
This is due to the ongoing exit of premium customers, industries and high-income households who are shifting to off-grid and alternative power solutions.
Currently, the Federal Government is grappling with a 4 trillion legacy debt to electricity generation companies (GenCos). New arrears have ballooned to ₦1.6 trillion as of August 2025 and are projected to reach ₦2.2 trillion by December.
Combined, total sector liabilities are now at ₦5.6 trillion.
According to sources at the Nigerian Electricity Regulatory Commission (NERC), only 13% of commercial customers now rely on the national grid, a sharp decline from 20%.
Rising electricity tariffs, poor supply reliability, and frequent grid failures have pushed businesses and elite households to invest in solar, gas, and other decentralized energy systems.
In 2024 alone, manufacturers spent ₦1 trillion on self-generation.
– NERC licensed 24 bulk consumers and 22 off-grid projects, adding nearly 289MW of capacity outside the national grid.
– Several states including Lagos, Jigawa, Delta, Zamfara and Katsina signed renewable energy deals.
The Federal Government is also planning to remove its agencies from the national grid, further shrinking the customer base.
With fewer premium customers paying higher rates, the government now faces an estimated ₦200 billion monthly tariff shortfall.
Despite promises to settle debts and stabilize the sector, the Tinubu administration has yet to provide a clear roadmap.
Though a promissory note program and ₦900 billion in subsidies were included in the 2025 budget, stakeholders argue this is inadequate, given that yearly subsidy needs average ₦2 trillion.
Efforts to enforce NERC’s newly issued Free Governor Control (FGC) regulation meant to stabilize grid frequency could add another ₦1.059 trillion annually in liabilities.
Most power plants are unable or unwilling to comply with the FGC order due to lack of compensation for idle or available capacity.
Industry leaders argue that without proper funding, GenCos will continue to disable stabilizing controls to avoid revenue losses, Grid instability will worsen and More customers will abandon the grid.
Dr. Joy Ogaji, Executive Secretary of the Association of Power Generation Companies (APGC), emphasized the urgent need for immediate settlement of GenCos’ receivables, transparent reconciliation of power supply invoices and enforcement of quarterly reviews.
She warned that continued instability is damaging equipment, increasing operational costs and deterring private sector participation.
Unless the Federal Government urgently intervenes with a sustainable financial and operational framework, Nigeria’s electricity market may face further collapse leaving the national grid to serve only the poorest citizens, while the wealthiest fully transition to alternative energy.
