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Electricity: GenCos Threaten National Shutdown Over FG’s N4 Trillion Debt

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Power Generation Companies (GenCos) warned on Monday of an imminent shutdown due to an N4 trillion debt owed by the Nigerian government for electricity generated and supplied to the national grid.

A statement on Monday, signed by Sani Bello, Chairman of the Board of Trustees of the Association of Power Generation Companies, said the debt, which includes N2 trillion for 2024 and N1.9 trillion in legacy debts, is threatening the continued operation of their power generation plants.

In February, the Minister of Power, Adebayo Adelabu, said the Nigerian government owes electricity generation companies (GenCos) and distribution companies (DisCos) in the country over N4 trillion in debt.

Mr Adelabu added that the debt burden is crippling the sector, making it challenging for GenCos to perform optimally.

GenCos said against the backdrop of the many challenges facing the power sector in Nigeria, the crises from cash liquidity are on the top burner and have reduced its ability to continue to perform their obligations, thereby threatening to completely undermine the Electricity value chain.

The firms added that their expectations of being settled through external support such as the World Bank PSRO have also been dampened due to other market participants’ inability to meet their respective distribution-linked indicators (DLIs) enshrined in the Power Sector Recovery Program (PSRP).

Mr Bello said access to forex is another problem, adding that given that major operation and maintenance needs in the generation sub-sector are dollarised, the importance of a specialised window or stable dollar allocation option for the GenCos cannot be overemphasised.

“GenCos is of the position that there is a need for a coordinated approach by all stakeholders in the Nigerian Electric Supply Industry (NESI) to address the liquidity issue realistically and sustainably in the power sector so that Nigerians can have access to reliable electricity supply.”

In light of the severity of the issues highlighted, he said the GenCos are requesting that immediate and expedited action is taken to prevent national security challenges that may result from the failure of the GenCos to sustain steady generation of electricity for Nigerians.

“The 2024 collection rate has dropped below 30 per cent, and 2025 is not any better, severely affecting GenCos’ ability to meet financial obligations. High corporate income tax, concession fees, royalty charges, and new FRC compliance obligations are further straining GenCos’ revenue.

“GenCos are currently owed about N4 trillion (N2 trillion for 2024 and N1.9 trillion in legacy debts). No possible solutions, including cash payments, financial instruments, and debt swaps are in sight,” Mr Bello said.

He said the 2025 government budget allocates only N900 billion, raising concerns about its adequacy to cover arrears and future payments.

“The power generated by GenCos have continued to be consumed in full without corresponding full payment, notwithstanding the commencement of the partial activation of contracts in the NESI which took effect from July 1, 2022, the minimum remittance order, bilateral market declaration, waterfall arrangement, the risks of inflation, forex volatility with no dedicated window to cushion the effect of the forex impact, the supplementary MYTO order which leaves about 90 per cent of GenCos monthly invoices unmet without a bankable securitisation, or financing plan.

“This situation has dire consequences for the GenCos and by extension the entire power value chain,” he said.

He explained that GenCos liquidity challenges are further worsened by the various policies introduced such as the payment waterfall in the NESI, which deprioritises payment to GenCos as service providers.

As a result of this, he said no one is under pressure to ensure GenCos invoices are fully settled.

“The implication of this is that GenCos only get paid a portion of their invoices (9 per cent, 11 per cent) from whatever amount is left.

“This is an aberration as it is a clear departure from existing terms of the Power Purchase Agreement (PPA) guiding the contractual relationship between GenCos and the Nigeria Bulk Electricity Trading Plc (NBET), by which NBET as buyer has contracted to purchase the available capacity as agreed under the PPA.”

He added that GenCos should be accorded the utmost priority when it comes to payment to enable them to have the capacity to continue to produce the electricity which is the product around which the entire power value chain is built.

“On the foregoing, we hereby demand the following to urgently put GenCos in a position to continue generating power for transmission and distribution to Nigerians: Immediate implementation of payment plans to settle all outstanding GenCos invoices. Reprioritisation of payments under the waterfall arrangement to give full priority to a hundred percent payment of GenCos’ invoices as at when due.

“A clear financing plan to backstop the exposures in the NERC’s Supplementary Order to the MYTO and the DRO 2024. Provision of payment security (guarantees) backed by World Bank/AFDB to guarantee full payment to GenCos, to enable them to meet their critical needs, improve generation to Nigeria and implement their respective growth and expansion plans,” he said.

BIG STORY

Reps Kick As Ibas Allocates N24bn For CCTV, N30bn For Gunboats In Rivers’ 2025 Budget

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The ad hoc committee of the house of representatives overseeing Rivers state has criticised Ibok-Ete Ibas, the state’s sole administrator, over certain allocations in the N1.48 trillion 2025 budget.

The senate had approved the N1.48 trillion appropriation bill for Rivers state on June 25.

A breakdown of the budget shows that N120.8 billion is designated for debt servicing, N287.38 billion for recurrent non-debt spending, and N1.077 trillion for capital projects.

At a budget defence session in Abuja on Monday, Julius Ihonvbere, the house majority leader and chair of the ad hoc committee, highlighted several concerns after reviewing the proposal.

Ihonvbere raised questions about the N24 billion set aside for CCTV, the N30 billion allocated for gunboats, and the N23 billion marked as contingency funds. He called for a full explanation and justification of these figures.

He noted that the budget lacked a medium-term expenditure framework (MTEF), which is a statutory requirement.

Ihonvbere also questioned the state’s decision to finance federal projects without a formal reimbursement agreement from the federal government.

He requested detailed records of local government fund transfers, including how third-tier funds are currently managed.

“We need additional details for those allocations. We request details of the state’s Internally Generated Revenue (IGR) in the last three months,” he said.

“That will enable us to know your financial flows so that we can weigh it against the deficit in the budget in terms of financing it and carrying out some of the projects.

“We also need details of transfers to local governments — essentially, how local government funds that came into the state are being managed at the moment.

“Those documents we have requested must reach us within 48 hours; rest assured that we are all on the same side in terms of getting Rivers working again.

“We want to ensure that we promote a lot of accountability and ensure that the interests of the people themselves, no matter how remote they are from the state capital, are protected.”

Responding for Ibas, Andrew Nweke, senior special assistant on strategy and policy, explained that many of the budget items were inherited by the current administration.

He said the allocations align with the priorities identified by the people of Rivers, following assessments conducted by implementing agencies.

Nweke said the CCTV allocation was intended for installing modern surveillance systems at the government house.

He also said the gunboats were designated for supporting security agencies in patrolling the state’s waterways.

He added that the contingency funds would be used to address emergencies such as flooding and insecurity.

He assured the committee that the requested documents would be submitted.

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BIG STORY

Tinubu Conferred With Knight Commander Of The Order Of Saint Lucia

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The Saint Lucian government has awarded President Bola Tinubu the title of Knight Commander of the Order of Saint Lucia (KCOSL), the country’s highest distinction.

“The Government of Saint Lucia is pleased to announce that, the Governor General has conferred the title of Knight Commander of the Order of Saint Lucia (KCOSL) upon H. E. Bola Ahmed Tinubu, GCFR, President of the Federal Republic of Nigeria,” the country revealed in a post on X.

Tinubu landed in Saint Lucia on Saturday as part of a diplomatic visit to two nations in the Caribbean and South America.

He had earlier addressed a joint session of the Saint Lucian senate and house of assembly.

During his address, Tinubu emphasized the importance of unity among Africans and those of African descent, stressing their common future.

“My visit to Saint Lucia is in keeping with the ideal of building the bridge between Africa and the Caribbean and creating a pathway to deepen economic ties and foster mutual cooperation. It also reflects our desire as a people to advance prosperity, sustainable development, and strengthen familial bonds,” he said.

“Nigeria and the island of Saint Lucia are bound by history, culture, and common aspirations. Our administration is determined to nurture and expand bilateral relations on trade, investment, tourism, education, and cultural exchange, as well as improve consular services for the citizens of both our nations.”

The Saint Lucian government has also announced plans to formalise diplomatic relations with Nigeria, aiming to build a structured platform to deepen collaboration in various mutually beneficial sectors.

“Saint Lucia and the Federal Republic of Nigeria will establish a visa waiver arrangement for holders of diplomatic and official passports from OECS member states,” the government stated.

“Nigeria will provide scholarships to citizens of OECS member countries and extend the services of the Nigerian Technical Aid Corps (TAC) to OECS countries.”

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Ibadan Poly Students Shut Down School Gates, Block Road Over Renaming to Olunloyo Polytechnic

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Students of The Polytechnic, Ibadan, have launched a large-scale protest following the decision to rename the institution to Omololu Olunloyo Polytechnic, Ibadan.

Gathering in significant numbers, the students closed off the main gate at the South Campus along with other entrances to express their disapproval of the development.

Governor ‘Seyi Makinde had earlier declared during a brief speech at the interdenominational commendation service for the late former governor at Obafemi Awolowo Stadium, Ibadan, that the institution would now be known as “Omololu Olunloyo Polytechnic, Ibadan.”

Previously, the students, through a statement issued by the Student Union Government President, Comrade Oladipupo Olamide, voiced their opposition, calling the renaming “unjustifiable and degrading.”

The protest has caused a major traffic disruption on the busy Sango-Eleyele Road in Ibadan, Oyo State’s capital, leaving many commuters stranded.

In a statement signed by the Executive Chairman, Maj. Adekoya RTd, the Oyo State Road Transport Management Agency advised road users to take alternate routes until the “temporary” road closure is resolved.

According to the release: “The general public are hereby informed of an ongoing student protest at The Polytechnic Ibadan, main Gate, the road in front of the school gate has been temporarily blocked.

“Motorists heading towards Eleyele, Apete, Ijokodo, and nearby areas axis from Sango and vice visa are advised to take alternative routes through Dugbe, Mokola or Ajibode to avoid delays and unnecessary confrontation.

“We appeal to all road users to remain calm, cooperate with traffic officers, and follow all traffic diversion signs.

“Thank you for your understanding.”

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