Contrary to reports on subsidy, the Association of Power Generation Companies (APGC) has declared that the Federal Government policy on electricity subsidies is nothing but a debt accumulation.
The Managing Director and Chief Executive Officer of APGC, Dr. Joy Ogaji, made this clarification on Monday in a statement whilst expressing concerns about broader issues affecting the operations of the generation companies and the sector in general.
“It is imperative to state that there is no FGN policy on subsidies. IT IS DEBT ACCUMULATION!!! If anyone has the proposed policy document please kindly share publicly.”
She clarified that the GenCos monthly generation invoices averages at about N250 billion, while the federal government’s budget only N900 billion for 2025, which is not cash-backed till date.
“The 2025 government budget allocates only ₦900 billion, raising concerns about its adequacy to cover arrears and future deficits.The power generated by GenCos have continued to be consumed in full without corresponding full payment.”
This is even as the APGC CEO, expressed concerns about Enugu State Electricity Regulatory Commission (EERC) tariff slash in its recent announcement for Band A customers from N209/kWh to N160/kWh effective 1 August, 2025.
According to the power association, “this tariff issued by EERC has set a precedent for all other States. From their tariff order, only N45 naira is captured for generation cost out of N112. This portends a bigger issue in the decentralisation of power or electricity to the states.
“The N45 of generation cost that EERC is assuming in their tariff setting, out of average N112, implies they are accounting for just 40%. Hence, 60% is left to be covered by the assumed FGN subsidy, which for this year is just N900bn and not CASH BACKED TILL TODAY!
“This is a huge contagion that needs to be dealt with but at the Presidency level.”
Ogaji recalled that GenCos are currently owed about N4 trillion (N2 trillion for 2024 and N1.9 trillion in legacy debts) (2015-2024) with an accumulated debt of N1.2trn for first half of 2025 alone.
She stated that there are NO workable solutions, including cash payments, financial instruments, and debt swaps in sight at the moment.
At the inception of the privatisation, as part of the takeover process and in line with the Government’s objectives, the GenCos entered into several agreements, including the Performance agreement, which defined the contractual relationship between FGN and GenCos, guaranteeing amongst others that GenCos:
Had sufficient and guaranteed gas supply; had requisite regulatory approvals to generate power; had grid connection and access to evacuate the quantum of energy generated; had securitised assurance that they would be paid as and when due by the off-taker; and that they would receive Capacity Charge payments for Generation Capacity made available if they were prevented from generating energy for reasons beyond their control.