Power generation companies have cautioned that the Federal Government’s proposed ₦3.6 trillion electricity subsidy framework may provide only short-term relief unless backed by long-term financing and structural reforms.
Under the Association of Power Generation Companies (APGC), the firms warned that limiting the subsidy plan to the 2026–2028 period could leave the sector vulnerable to renewed liquidity pressures once the programme ends.
APGC Chief Executive Officer, Joy Ogaji, reacting to fiscal documents showing annual provisions of about ₦1.2 trillion for subsidies, described the initiative as proactive but stressed that appropriation alone would not stabilise the sector unless payments are consistently executed.
“We appreciate the Federal Government for coming up with this approach. However, we hope the funds are fully appropriated and eventually paid to the GenCos,” she said. Ogaji questioned the rationale behind ending the subsidy timeline in 2028, warning that the industry’s financial challenges are too deep for a short-term intervention.
She noted that while subsidies may cushion immediate pressures, they do not address longstanding weaknesses such as poor financial discipline and accountability gaps across the electricity value chain. Ogaji urged the government to prioritise clearing legacy obligations owed to GenCos, with liabilities reportedly climbing to ₦6.4 trillion as of December 2025 and increasing by about ₦200 billion monthly.
Although the Federal Government recently issued a ₦501 billion bond to offset part of the arrears, Ogaji said the instrument mainly targets historical debts and does not address ongoing payment shortfalls.
Analysts warn that without stronger safeguards to guarantee timely disbursements, the subsidy plan could face the same implementation risks that undermined past interventions. Stakeholders also expressed concern that budgetary allocations do not always translate into actual payments, underscoring the need for transparency and consistency in managing sector finances.
Despite the concerns, Ogaji maintained that GenCos remain open to collaboration with government and stakeholders to achieve lasting reforms. “The power sector’s challenges require decisive action and strong political will,” she said.
The Federal Government defended the subsidy arrangement, stating that deductions from the Federation Account are intended to ensure the cost is collectively borne by all tiers of government rather than the Federal Government alone.
By Juliet Ezeh, Abuja
