Power generation companies operating under the Association of Power Generation Companies (APGC) have called on the Federal Government to extend its proposed ₦3.6tn electricity subsidy payment plan beyond 2028, warning that the liquidity crisis plaguing the power sector cannot be resolved within three years.
The Chief Executive Officer of APGC, Mrs Joy Ogaji, made the appeal while reacting to documents indicating that the Federal Government plans to provide for power subsidy payments between 2026 and 2028, amounting to a total of ₦3.6tn.
Under the proposal, the Federal Government plans to deduct ₦3.6tn from the Federation Account over the three-year period to fund electricity subsidies, a move intended to spread the financial burden across federal, state and local governments.
The plan is aimed at addressing Nigeria’s growing electricity subsidy debt, which has significantly constrained liquidity across the power sector, while also improving fiscal transparency by explicitly accounting for subsidy obligations.
Details of the proposal are contained in the Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper for 2026–2028. The document lists electricity subsidy payments under “Other FAAC Deductions” from the Federation Account Revenue – Main Pool, VAT and Stamp Duty.
According to the MTEF, electricity subsidies are pegged at ₦1.2tn annually for 2026, 2027 and 2028.
While welcoming the initiative, Ogaji described the plan as a proactive step but cautioned that it would fall short if it is not fully appropriated, transparently implemented and backed by strong political will.
“We appreciate the Federal Government for coming up with this proactive approach. From the documents provided, there will be provisions for 2026 to 2028, which is three years. We are hoping that it is fully appropriated and that the funds are actually paid to the GenCos,” she said.
Questioning the sustainability of the framework, the APGC chief expressed concern over plans to end the subsidy regime in 2028, warning against unrealistic expectations of a sudden turnaround afterward.
“Is it not possible to extend the period beyond 2028? Are we expecting a miracle after 2028? Do we have a magic wand to wave off the crux of the liquidity conundrum?” Ogaji asked.
She noted that while the subsidy plan may offer temporary relief, it does not address the structural weaknesses undermining the electricity value chain, particularly poor financial discipline and weak accountability.
“This still calls for a better structured financial plan, as this will only fund a leaking basket without establishing the discipline and accountability required to stop the contagion,” she stated.
Ogaji also stressed the need for retroactive measures to clear outstanding and legacy debts owed to power generation companies, noting that unpaid obligations continue to hamper operations and investment in generation capacity.
“I will, however, advise that this plan take retroactive action, as necessary, to clear all outstanding and legacy debts. A more comprehensive approach to make the sector viable is needed,” she said.
Describing the sector’s challenges as deep-rooted, Ogaji warned that short-term subsidies alone would not deliver lasting solutions.
“The power sector wound is beyond plasters and bandages. There is a cure—a renewed focus on the sector with strong political will,” she said.
Despite the concerns, she expressed confidence in the Federal Government’s ability to fix the sector, adding that GenCos are willing to work collaboratively with relevant stakeholders to achieve sustainable reforms.
“We are confident that the Federal Government has all it takes to fix the sector, and we are ready and willing to collaboratively work to achieve sustained success,” she said.
Meanwhile, some industry stakeholders have expressed scepticism over the proposed subsidy payments, citing previous instances where budgetary provisions did not translate into actual disbursements.
They warned that without strong safeguards to ensure transparency, consistency and timely payments, the subsidy plan may fail to reflect actual expenditure across the power value chain.
