The Nigerian national power grid experienced another collapse on Wednesday, marking the twelfth such incident in 2023. The grid failure resulted in a nationwide blackout, with power generation plummeting to zero megawatts. The collapse was attributed to the abrupt halt in gas supply by wholesale gas producers to power generation companies (Gencos) due to unpaid debts amounting to approximately N2.7 trillion. This debt had accumulated from previous gas supplies, and the gas producers took the drastic step of cutting off supply as a means of pressuring the government and Gencos to address the outstanding payments. Given that approximately 70% of Nigeria’s electricity is generated by gas-fired power plants, the disruption in gas supply had an immediate and severe impact on the nation’s power supply.
Following the grid collapse, engineers from the Transmission Company of Nigeria (TCN) worked to restore power. By early Thursday morning, power generation had climbed back to 2,412.89 megawatts, and later peaked at 3,624.34 megawatts in the evening. This resurgence in power generation indicated that the gas suppliers had either temporarily postponed or suspended their threat to halt supply completely. While the restoration was a welcome relief, the generated power still fell short of Nigeria’s average generation capacity of 4,500 megawatts, highlighting the ongoing challenges in the power sector. The temporary reprieve from a complete blackout suggested the intervention of the Federal Government in addressing the gas supply crisis.
Senior officials within the Federal Ministry of Power confirmed the government’s intervention in the matter. Recognizing the critical role of gas-fired plants in Nigeria’s power generation mix, they emphasized the government’s commitment to preventing a nationwide blackout. The officials stated that the government was actively working to resolve the gas supply issues, which led to the restoration of the grid and the subsequent increase in power generation. While the specifics of the government’s intervention were not explicitly disclosed, industry insiders speculated that it likely involved settling a portion of the outstanding gas debts, a strategy employed by the government in previous similar situations. This approach, while providing temporary relief, does not address the underlying systemic issues contributing to the recurring debt problem.
The Association of Power Generation Companies (APGC), through its Chief Executive Officer, Dr. Joy Ogaji, shed further light on the precarious financial situation faced by Gencos. She confirmed that gas suppliers had indeed halted supply due to the mounting debt. According to Dr. Ogaji, the total debt owed to gas suppliers had escalated to over N2.7 trillion, a significant portion of which stemmed from unpaid invoices for gas supplied to thermal power plants. The Gencos, caught in a financial squeeze between the unpaid debts owed to gas suppliers and the inadequate payments received from the Nigerian Bulk Electricity Trading Plc (NBET), found themselves struggling to operate sustainably. This precarious financial position forced the Gencos to adopt a strategy of proportionally distributing the limited payments received from NBET to gas suppliers, merely delaying the inevitable escalation of the debt crisis.
Dr. Ogaji emphasized that the gas supply halt and the subsequent grid collapse were not unforeseen events. She stated that the Nigerian Electricity Regulatory Commission (NERC), the Minister of Power, and even the Presidency were all aware of the looming crisis. Despite this awareness, a sustainable solution had not been implemented prior to the grid collapse, highlighting a systemic failure to address the fundamental financial challenges plaguing the power sector. The repeated pattern of accumulating debt, followed by a crisis and subsequent government intervention, underscores the need for a long-term, sustainable solution that addresses the root causes of the financial instability within the power sector.
Earlier in the year, Minister of Power, Adebayo Adelabu, had announced the government’s intention to begin offsetting a portion of its debts to both power generating companies and gas suppliers starting in April. He also pledged to collaborate with the Central Bank of Nigeria to prioritize foreign exchange allocation to the power sector, aiming to enhance generation capacity. However, despite these promises, the debt crisis persisted and ultimately culminated in the grid collapse and subsequent blackout, emphasizing the gap between policy pronouncements and effective implementation. The recurring nature of these crises highlights the urgent need for structural reforms within the power sector to establish a sustainable financial model that ensures reliable power supply for the nation.
