Nigeria's Gencos Operate at 25.8% Capacity Utilization

The Association of Power Generating Companies (APGC) in Nigeria has reported that the country's power generation companies (Gencos) are operating at only 25.8% of their installed capacity of 15,500 MW, averaging around 4,000 MW. This underutilization is attributed to deep-rooted regulatory distortions and operational constraints within the electricity market.

Dr. Joi Ogaji, the Chief Executive Officer of APGC, emphasized that misconceptions surrounding capacity payments and the power purchase agreement (PPA) market design obscure the real reasons behind the stranded capacity.

Gencos argue that they are not compensated for energy that is dispatched, leading to significant financial losses. The report highlights that approximately 7,000 MW of capacity is not recognized within the commercial framework, discouraging investment and recovery of costs.

The sector faces a liquidity crisis, with Gencos owed N6.2 trillion in outstanding receivables, which does not reflect the full contractual entitlements. The current settlement practices are negatively impacting cost recovery and performance.