- National grid crisis worsens as premium customers switch to solar and self-generation.
- The crisis deepens as liabilities approach N6.2 trillion with no clear repayment strategy.
Nigeria’s national grid crisis worsens as the power sector faces unprecedented financial strain. Premium customers are leaving the grid, and this mass exit threatens government finances. Currently, liabilities stand at N5.6 trillion and could rise to N6.2 trillion by the end of 2025.
The government already struggles with N4 trillion in legacy debts to generation companies (GenCos). New arrears have surged to N1.6 trillion and may reach N2.2 trillion by December. These figures underline the sector’s fragility and raise fears of deeper instability.
Commercial reliance on the national grid has dropped from 20 per cent to 13 per cent. Due to unreliable supply and rising costs, businesses and households are increasingly adopting alternative energy. Manufacturers alone spent a record N1 trillion on self-generation in 2024. At the same time, premium households are investing heavily in solar systems.
In 2024, the Nigerian Electricity Regulatory Commission (NERC) licensed 24 bulk consumers for independent generation and 22 for off-grid projects, adding 289 megawatts of capacity outside the national grid. In 2025, five states, including Lagos and Jigawa, signed renewable energy agreements. The Federal Government has also signalled plans to remove its agencies from the grid supply.
As customers migrate, the government now faces a monthly tariff shortfall of about N200 billion. This crisis is worsened by the frozen electricity tariff policy, which remains in place despite earlier reform promises.
Meanwhile, efforts to clear GenCos’ debts remain unclear. Finance Minister Wale Edun has given repeated assurances but no timeline. The Debt Management Office has offered only N800 billion for all creditors in 2025, leaving the GenCos’ funding gap unresolved.
Industry leaders insist that GenCos must be included in any payment framework. They also stress the need for transparency, quarterly reviews, and timely settlement of verified debts. Liquidity and capacity crises may escalate without such measures, pushing the grid closer to collapse.
Stakeholders warn that enforcing NERC’s compulsory Free Governor Control (FGC) across plants could add another N1.059 trillion yearly burden. While FGC stabilises frequency, operators argue they cannot sustain compliance without proper compensation for available capacity.
The Managing Director of Azura Power, Edu Okeke, explained that operators disable governor systems because compensation structures are inadequate. This practice increases the risk of grid collapse during demand fluctuations. Similarly, GenCos face mounting maintenance costs, fuel inefficiencies, and unpaid receivables that further undermine the system.
Nigeria’s power sector risks further decline unless the government introduces clear financing strategies. For now, the national grid crisis remains both a financial and technical challenge.