GenCos Lose N2.3tn to Stranded Power as Grid Bottlenecks Persist

Nigeria’s electricity generation companies (GenCos) have reportedly lost an estimated ₦2.3 trillion in potential revenue over the past few years due to persistent grid bottlenecks, transmission inefficiencies, and limited power evacuation capacity, which continue to hinder the flow of generated electricity to consumers across the country. Despite generating enough power to meet a substantial portion of national demand, thousands of megawatts remain stranded daily, worsening energy shortages and economic inefficiencies.

Industry reports indicate that the nation’s installed generation capacity currently stands at over 13,000 megawatts (MW), while available capacity fluctuates between 4,000 MW and 7,000 MW, depending on grid stability and gas supply. However, due to infrastructure constraints and frequent system collapses, the Transmission Company of Nigeria (TCN) is often unable to evacuate more than 4,500 MW to the national grid. This mismatch has resulted in consistent energy losses, forcing GenCos to operate below capacity and absorb heavy financial losses.

Speaking on the issue, the Association of Power Generation Companies (APGC) described the situation as “economically unsustainable” and urged the Federal Government to expedite reforms aimed at improving grid reliability, expanding transmission lines, and ensuring timely payment for power generated. The group’s Executive Secretary, Dr. Joy Ogaji, lamented that stranded generation has reached alarming levels, with most GenCos unable to recover their investments due to the inability of the national grid to wheel out produced energy.

“Currently, the sector operates in a cycle of inefficiency where GenCos are generating more than the transmission network can accommodate. As a result, billions of naira worth of energy remains stranded monthly. This has led to an estimated loss of over ₦2.3 trillion, which could have been reinvested into infrastructure upgrades and capacity expansion,” Ogaji explained.

She further highlighted that the lack of a stable and efficient transmission network poses the single greatest challenge to Nigeria’s electricity market, emphasizing that while generation and distribution have been partially privatized, the transmission segment remains government-controlled, creating operational bottlenecks and limited accountability.

The APGC boss also warned that without urgent action, the persistent underutilization of available power generation could discourage investors and further weaken the financial viability of the power sector. “Investors in power generation are losing confidence due to stranded capacity, delayed payments, and the absence of cost-reflective tariffs. The sector’s liquidity crisis is worsening, and this directly affects the ability of operators to maintain equipment, service loans, and expand operations,” she said.

Data from the Nigerian Electricity Regulatory Commission (NERC) corroborates these concerns. NERC reports show that between 2020 and 2024, average stranded power ranged from 2,000 to 3,500 MW daily, largely due to grid instability, gas shortages, and load rejection by distribution companies (DisCos). The regulator has since initiated measures to promote investments in embedded generation, off-grid systems, and regional mini-grids to bypass the limitations of the national grid.

An energy economist, Dr. Adedayo Adebisi, explained that the losses attributed to stranded generation extend beyond the GenCos. “Every megawatt of power that fails to reach industries and households translates into lost productivity, higher production costs, and increased reliance on diesel generators. The ₦2.3 trillion loss is not just a GenCo issue — it is an economy-wide problem affecting growth and competitiveness,” he said.

According to Adebisi, the power sector’s inefficiencies have contributed to the estimated $29 billion annual economic loss Nigeria suffers from inadequate electricity supply, as reported by the World Bank. He added that solving the grid bottleneck requires massive investment in transmission infrastructure, modernization of grid systems, and the deployment of smart technologies to improve monitoring and response capabilities.

The Minister of Power, Chief Adebayo Adelabu, recently acknowledged the scale of the challenge and outlined the Federal Government’s commitment to strengthening grid reliability under its ongoing Power Sector Recovery Plan (PSRP). He noted that the government, in partnership with development finance institutions such as the World Bank, African Development Bank (AfDB), and Japan International Cooperation Agency (JICA), is funding projects to upgrade substations, rehabilitate transmission lines, and construct new 330kV and 132kV networks across the country.

Adelabu disclosed that the government aims to increase the grid’s transmission capacity from the current 5,500 MW to at least 10,000 MW within the next two years. “We recognize that generation without adequate transmission capacity is meaningless. Our goal is to build a more resilient and flexible grid that can accommodate more power, integrate renewable energy sources, and support industrial growth,” he stated.

However, industry operators remain skeptical about the pace of reform, noting that several previously announced grid expansion projects have suffered delays due to funding constraints, bureaucratic bottlenecks, and lack of political will. Some GenCos have begun exploring bilateral power supply agreements with large industrial customers under the Eligible Customer Policy, allowing them to sell electricity directly to end-users without going through the national grid.

Energy analyst Mrs. Funke Akinyemi said such policies represent a viable stopgap for GenCos but stressed that only a comprehensive overhaul of the transmission network will provide a long-term solution. “While bilateral deals help producers recover costs, they cannot replace a functioning national grid capable of delivering power efficiently across all regions. The government must fast-track private sector participation in transmission infrastructure,” she said.

In addition, experts have called for the establishment of a Transmission Network Expansion Fund to mobilize resources from public and private sectors for the modernization of the grid. They also advocated for the unbundling of the TCN to create competitive regional transmission companies that can improve efficiency and attract investment.

The continuous financial strain on GenCos has raised fears of operational shutdowns, which could worsen power shortages nationwide. Many of the companies have reportedly been unable to service their debts, meet payroll obligations, or finance maintenance operations due to liquidity challenges.

As Nigeria pushes toward its Energy Transition Plan (ETP) and targets net-zero emissions by 2060, experts warn that persistent grid bottlenecks could stall progress in renewable energy integration, industrial growth, and economic diversification. For now, stranded generation remains a major bottleneck to Nigeria’s quest for stable and sustainable electricity supply — a challenge that demands immediate and coordinated action across all levels of government and industry.