GenCos lose N2.3tn to stranded power as grid bottlenecks persist

Power-generating companies in Nigeria have lost a staggering N2.31tn over the last twelve years due to electricity that could have been generated but was left unused as a result of grid and operational constraints, The PUNCH reports.

This is according to fresh data from the Association of Power Generation Companies, the umbrella body for all electricity generation firms in the country, analysed by our correspondent on Sunday.

It said the losses were recorded between 2013 and September 2025.

The figure represents the cumulative value of power that was available for generation but could not be evacuated by the national grid or distributed to end users.

The figure, sourced from the National Control Centre and presented by the APGC Managing Director/Chief Executive Officer, Joy Ogaji, at its 20th anniversary celebration, highlights the worsening financial strain facing the nation’s electricity market, as power producers continue to shoulder huge losses from stranded generation capacity.

In practical terms, Annual Capacity Payment Loss refers to the monetary value of electricity generation capacity that was available but not utilised or evacuated to consumers due to technical or operational constraints in the transmission and distribution networks.

For example, while generation companies routinely declare between 6,000MW and 7,000MW available capacity, the national grid evacuates about 4,500MW — a shortfall that results in billions of naira in lost capacity payments.

The findings reveal a persistent structural inefficiency in Nigeria’s electricity market, with more than 2,000 megawatts of power stranded each year despite huge investments in generation capacity since the privatisation of the sector.

According to the data, total stranded generation capacity between January and September 2025 averaged 2,221.99MW, leading to N119bn in capacity payment losses within the nine months.

But a cumulative review from 2013 shows that the market has forfeited over N2.3tn to idle capacity that could not be transmitted or distributed — an amount that could have built hundreds of substations or financed new gas plants.

The data showed that, for instance, in 2015 stranded generation was high, with 3,010.24MW (45.50 per cent) left unutilised, costing the sector N214.93bn. Similarly, in 2016, Nigeria recorded its worst year on record, with 3,827.98MW stranded on average, representing 54.38 per cent of available generation capacity. That year, the financial loss to the sector stood at N273.32bn.

In 2017, 3,311MW of power was stranded, leading to an annual capacity payment loss of N236.47bn, while in 2018, losses reached N264.08bn as stranded capacity hit 3,698MW. In 2019 and 2020, the figures were N256.85bn and N266.10bn respectively, as well as roughly 3,597MW and 3,742MW in those years.

Admittedly, from 2021, the stranded power challenge appeared to have reduced, with a N159.85bn and 2,248MW loss, while in 2022 it reduced even further to N132.19bn and 1,816MW respectively. 2023 experienced stranded power amounting to N162.06bn and 2,226MW, while the whole of 2024 yielded capacity losses of N154.72bn and 2,180MW respectively.

Nigeria’s available generation capacity averaged 6,806.63 megawatts between January and September 2025. However, only about 4,637.72MW was actually utilised, leaving 2,221.99MW stranded each month.

That means roughly 32 per cent of the power that could have been utilised was wasted, the information showed.

A breakdown of the 2025 data showed that the highest losses were recorded in August (N20.17bn), followed by September (N16.86bn) and July (N15.77bn). The least losses were recorded in February, with N8.34bn.

The cumulative capacity payment loss for the nine months stood at N113bn, underscoring the scale of idle generation despite the country’s chronic electricity shortage.

In her speech while making the presentation, the APGC boss said the Nigerian power market is heavily weighed down by inefficiencies, unpaid obligations, and policy inconsistencies.

“All this power that is stranded, that is not being used, there is a capacity charge to it, and that is what this data captures.

“What the GenCos are asking the government to pay now doesn’t even include this. What we are owed is only for energy, not capacity,” she explained.

Nigeria’s power sector was privatised in November 2013, when the Federal Government handed over the assets of the Power Holding Company of Nigeria to private investors in a bid to ensure efficiency and expand supply.

Under the Performance Agreement signed with the Bureau of Public Enterprises, the GenCos were guaranteed: uninterrupted gas supply; grid access to evacuate generated power; and full payment for energy supplied and capacity made available.

However, Ogaji noted that the implementation of these agreements collapsed once the Nigerian Bulk Electricity Trading Plc took over as market operator.

“At the beginning, GenCos were paid capacity charges. But once NBET was introduced, the payment story changed. That’s when we started hearing story upon story, and capacity payments became irregular.

“Even though GenCos have grown capacity and maintained their plants as agreed, the sector still operates below potential because the grid cannot take what we produce,” Ogaji said.

She noted that the market’s liquidity crisis has also worsened as GenCos, which depend on capacity payments to service loans and maintain plants, continue to receive less than 100 per cent of their monthly invoices.

“The non-payment of capacity charges undermines the bankability of GenCos. Without a sustainable payment mechanism, it will be impossible to finance major maintenance or expand the total national supply.”

She cautioned that the current state of affairs not only discourages foreign investors but also jeopardises the reliability of existing generation assets.

Despite the country’s persistent lack of electricity, over 10,000 megawatts of electricity are being wasted across different idle plants scattered across the country, the Minister of Power, Adebayo Adelabu, recently revealed.

He decried the country’s wastefulness in the energy sector, revealing that more than 10 gigawatts of generation capacity remain stranded nationwide while millions of citizens live in darkness.

The minister added that the country’s immediate problem was not generation but the inability to transmit and distribute the energy already available.

He described the country as wasteful because plants that should light up businesses and homes were left idle without considering the cost of construction.

“In Nigeria today, we have over 10 gigawatts of stranded generation capacity. Yes, we have energy being generated or installed all over the country that we are not even using. Generation will not be our immediate problem today, but stable transmission and effective distribution to households, with full metering.

“Energy that will power industries, create jobs, and even support electricity exports to our neighbouring countries through the regional power pool is all stranded,” he said.

The losses extend beyond the electricity market; they also hamper economic growth.

According to the APGC, a 1 per cent increase in power supply could grow Nigeria’s GDP by up to 3.94 per cent, yet persistent grid collapses and stranded capacity have kept industrial output and productivity low.

The group said if even half of the stranded 2,000–3,000MW had been delivered consistently to homes and industries, the country could have achieved an additional 10–12 per cent GDP growth over the last decade.

“Electricity drives industrialisation and employment. Nigeria cannot achieve economic expansion when power plants sit idle,” Ogaji said.

To address the recurring losses, the APGC urged the Federal Government to honour all contractual obligations under the power purchase agreements; strengthen transmission and distribution infrastructure; guarantee full and timely payment of GenCos’ capacity and energy invoices; and promote investment in grid expansion and gas supply.

The association also recommended the implementation of bilateral contracts, off-grid alternatives, and targeted grid upgrades to optimise power evacuation and supply reliability.