Nigeria’s electricity sector faces a severe crisis. Debt levels climbed by 62.5% to N6.5 trillion by the end of 2025 from N4 trillion earlier in the year. This sharp increase now endangers the Federal Government’s plan to issue a N1.2 trillion bond.
The Alarming Debt Surge
Stakeholders point to unpaid subsidies as the main driver. Generation companies received only 35% of their invoices from May to October 2025. Meanwhile unpaid amounts reached N984.3 billion during that period.
Moreover the sector’s total debt hampers critical infrastructure upgrades. Investors hesitate to commit funds amid such uncertainty. As a result, power supply remains unreliable for many Nigerians.
Causes Behind the Rise
The Federal Government failed to back its subsidy policy with actual cash payments. Distribution companies collected N570.25 billion out of N706.61 billion billed in the third quarter of 2025. However low remittance rates worsened the liquidity crunch.
In addition, the Nigerian Electricity Regulatory Commission introduced remittance obligations in 2024. These rules require discos to pay 40% of invoices. Yet gaps between tariffs and costs continue to fuel debt growth.
The Bond at Risk
The government launched a N590 billion Series 1 Power Sector Bond in December 2025. This move aims to address liquidity issues. But rising debts threaten the full N1.2 trillion bond rollout planned for early 2026.
Generation companies criticize the bond’s structure. They call certain clauses “death warrants” due to lack of transparency. Therefore confidence in the plan remains low.
Stakeholder Reactions
Consumers express frustration over poor service. Chijoke James, from the Electricity Consumers Association, urges the government to honor subsidies. He notes that higher tariffs for Band A customers fail to deliver promised supply.
Energy expert Prof. Yemi Oke labels the subsidy regime unsustainable. It adds N2 trillion annually to existing debts. Similarly, Azura Power’s Edu Okeke warns of no new investments without full payments.
Path Forward
The government commits to funding tariff gaps through bonds and subsidies. Regulators push for cost reflective tariffs to protect vulnerable users. Moreover, stakeholders demand more transparency.
In conclusion, resolving this debt crisis requires urgent action. Improved payments and investments can stabilize the sector. Meanwhile Nigerians need reliable power to drive economic growth.
