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N5.6tn debt: Energy crisis looms as gas firms cut supply

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Nigeria faces the threat of nationwide blackouts as gas companies reduce their supply to power plants due to an outstanding N5.6 trillion debt owed to power generation companies.

The development has raised concerns about the stability of the national grid and the country’s ability to sustain its electricity supply.

The Managing Director/Chief Executive Officer of the Association of Power Generation Companies, Dr Joy Ogaji, confirmed the development in an interview with The PUNCH on Thursday. She warned that the situation, if not urgently addressed, could push Nigeria deeper into darkness.

This warning came shortly after another national grid collapse threw the entire country into blackout earlier in the week. Although partial restoration has since brought back about 4,000 megawatts, many plants are still operating below capacity.

Ogaji explained that while GenCos remain committed to supporting the country, the liquidity crisis in the sector has spiralled out of control. She disclosed that from January to August 2025 alone, an additional N1.6tn debt had accumulated, bringing the total outstanding to N5.6tn.

She recalled that President Bola Tinubu had met with the GenCos on July 25 to discuss an estimated N4 trillion debt owed to them, covering legacy debts and unpaid invoices. At the meeting, Tinubu appealed for patience while the government completed the verification and validation of the claims. He also approved, in principle, a N4tn bond programme to address the liquidity gap in the sector.

“Almost two months after that meeting, there has been no follow-up engagement with the GenCos on how these debts will be settled,” Ogaji lamented.

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She explained that about 60 per cent of GenCos’ revenues go to gas producers, meaning that the debt burden directly undermines gas supply. With suppliers already reducing deliveries, she warned, the electricity market could soon grind to a halt.

Ogaji stressed that despite the patriotic commitment of operators to keep the lights on, factors outside their control make it nearly impossible to sustain generation. She listed gas supply, maintenance of machines, procurement of spare parts, and obligations to other creditors as key challenges.

“Gas suppliers have already started reducing supply. There are critical maintenance works on our machines, spares to purchase, and other creditors who are no longer willing to wait for payments. They now prioritise those who pay them promptly,” she stated.

According to her, the prevailing market structure is incompatible with Nigeria’s growth ambitions. “No substantial private sector investment will flow into this sector unless urgent reforms are implemented. Only the Federal Government, in collaboration with NBET and NERC, can unlock these challenges,” she said.

The APGC boss revealed that GenCos’ monthly invoices average N270bn, but only about N70bn is paid, leaving N200bn outstanding every month. She faulted the 2025 federal budget, which earmarked N900bn for the power sector without cash backing, calling it grossly inadequate.

She also expressed concerns over the Federal Government’s plan to issue promissory notes to settle the debts. According to her, the details of such instruments remain unclear, raising apprehension among investors.

“Promissory notes and bond proposals go to the root of our contractual agreements in the market. We must understand the terms, conditions, and risks before committing,” she said.

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Ogaji highlighted the risks of such instruments, including interest rate exposure, foreign exchange volatility, credit risk, and liquidity risk. She noted that promissory notes cannot be repurchased in the open market, which creates refinancing risks at maturity.

“GenCos will not make concessions that undermine our obligations to other creditors. Any breach of contractual terms by the government has a ripple effect on our finances and relationships with bankers and other partners,” she warned.

Ogaji urged the Federal Government, the Nigerian Electricity Regulatory Commission, the Debt Management Office, and the Nigerian Bulk Electricity Trading Plc to urgently engage GenCos on viable solutions. She questioned whether the proposed promissory notes would be exclusive to GenCos or open to other government contractors, which could dilute the chances of settlement for power producers.

“GenCos remain patriotic investors, but patriotism alone cannot run power plants. Without urgent action, Nigeria risks another round of prolonged blackouts,” she said.

Efforts to obtain the reaction of the Minister of Power, Adebayo Adelabu, were unsuccessful, as his spokesman, Bolaji Tunji, did not respond to calls or messages.

Meanwhile, the Transmission Company of Nigeria confirmed some recovery on the national grid, with power generation climbing to nearly 4,000 megawatts by Thursday. However, several power plants are yet to resume full output, underscoring the fragility of the system.

Industry stakeholders say that unless the Federal Government swiftly addresses the liquidity crisis and debt overhang, Nigeria’s electricity sector may face deeper collapse, with dire consequences for homes, businesses, and the overall economy.

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IMF advises Nigeria against restoring blanket petrol subsidy, read details

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The International Monetary Fund has advised Nigeria against restoring blanket petrol subsidy, urging the Federal Government to channel support towards vulnerable citizens as rising energy costs put pressure on households.

The Director of the IMF’s Fiscal Affairs Department, Rodrigo Valdés, gave the advice on Wednesday while responding to a question about calls for the return of petrol subsidy in Nigeria ahead of elections, during the IMF and World Bank Group annual meetings in Bangkok, Thailand.

Valdés acknowledged the political pressure governments face when fuel prices rise but said blanket subsidies were costly and that available resources would be better used to support people most affected by higher energy prices.

He said, “At the end of the day, it’s very tempting politically speaking because it’s not trivial the political effect of the price of oil, of fuels, of gasoline, of diesel.

“But you have to explain that this is a global shock, first. Second, that it’s very, very expensive for the country not to recognise that shock.

“And third, it’s much better to use some of that money that would you spend in the subsidies channeled towards more vulnerable people.”

He added that targeted support was preferable to a blanket subsidy, saying: “Yeah, gasoline could go up and perhaps bus fees may be subsidised in a way. That is a much better policy at the end of the day than just a blanket subsidy for everybody.”

He said governments should consider targeted assistance rather than keeping fuel prices artificially low for all consumers.

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The IMF has argued that broad-based fuel subsidies are expensive and often disproportionately benefit higher-income consumers, who tend to consume more fuel.

The advice comes as Nigeria faces renewed pressure over petrol prices following increases in global energy costs.

The Federal Government recently announced a 30-day petrol discount at Nigerian National Petroleum Company Limited retail stations, with priority for public transport operators, to cushion the impact on consumers.

Finance Minister Taiwo Oyedele said NNPC retail would sell petrol at cost by foregoing its retail profit margin, describing the measure as temporary relief rather than a return to petrol subsidy.

The government has also proposed negotiating a ceiling of N1,350 per litre on petrol’s ex-gantry or landing cost, subject to monthly reviews.

Valdés said fuel subsidies could also worsen global energy pressures by preventing demand from adjusting when supplies were constrained.

“When you subsidise, you don’t allow, at the end of the day, demand to adjust.

“And reality is that we have less fuels in the world economy. That means that someone else has to adjust more, and the market produces a higher price for that,” he said.

The IMF also recommended targeted interventions to cushion the impact of higher fuel prices on transportation costs.

A division chief in the fund’s Fiscal Affairs Department, Davide Furceri, suggested that governments could redirect resources from blanket subsidies towards support for public transport users and other vulnerable groups.

He also suggested measures such as school feeding programmes, geographical targeting and assistance for vulnerable farmers.

Furceri acknowledged that some countries lacked household registries and digital payment systems needed to deliver targeted assistance effectively, but said governments could adopt alternative approaches while developing stronger systems.

See also  Vehicle imports slide 10% on weak consumer spending

He recommended that support should be limited, targeted and temporary.

Source: punchng.com

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African cocoa farmers face possible exclusion from EU market, group warns

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The Coffee Farmers Alliance Association of Africa has warned that up to 40 per cent of African smallholder cocoa farmers could be excluded from the European market because they cannot meet compliance requirements under the European Union Deforestation Regulation.

The Global President of COCEFAAA, Adeola Adegoke, raised the concern at the conclusion of the two-day Africa Cocoa and Coffee Conference held in Lagos, where stakeholders called for stronger African participation in shaping international trade policies affecting the continent’s cocoa and coffee industries.

In a statement issued on Wednesday, Adegoke expressed concern that the regulation could impose significant challenges on smallholder farmers, particularly those who lack the financial resources, technology and documentation systems required to meet its traceability standards.

He said, “Up to 40 per cent of African smallholder farmers could face exclusion from the European market if they are unable to comply with the requirements.

“The EUDR is designed to ensure that certain commodities entering the European Union market are not linked to deforestation. However, concerns have emerged over the cost and complexity of compliance, particularly for small-scale farmers who may struggle to provide the necessary information to demonstrate compliance,” he added.

Adegoke stressed the need for African cocoa-producing countries to strengthen their negotiating positions and improve traceability systems to protect farmers from potential disruptions to international trade.

He called for measures to ensure that smallholder farmers receive adequate technical and financial support to meet evolving market requirements without losing access to key export destinations.

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Another major issue discussed at the conference was the emergence of cell-cultured cocoa technologies and their potential implications for traditional cocoa-producing communities.

Adegoke expressed concern that increased investment in alternative cocoa production technologies could affect demand for conventionally grown cocoa and create additional uncertainty for farmers whose livelihoods depend on the crop.

He urged African countries to assess the potential economic and social implications of these technologies while developing strategies to safeguard the interests of cocoa farmers and their communities.

The conference also highlighted the need for stronger cooperation among African cocoa- and coffee-producing countries to ensure that the continent has a greater voice in shaping international trade policies and standards.

Participants adopted the Lagos Declaration 2026, a shared statement of commitments aimed at improving farmers’ livelihoods, boosting productivity and expanding African ownership of the cocoa and coffee industries.

More than 200 delegates attended the conference, representing producing countries, governments, research institutions, development partners, commodity associations, private businesses, multilateral organisations and the media.

Speaking on the challenges facing the continent’s cocoa and coffee sectors, Adegoke said Africa had the expertise and solutions needed to transform the industries but lacked effective mechanisms to scale them across the continent.

“Africa is not short of solutions. We are short of mechanisms to scale them,” he said.

The Lagos Pact outlines three key positions that African cocoa- and coffee-producing countries intend to advance at continental and international negotiations.

These include reserving the terms “cocoa” and “coffee” for farmed products, advocating mandatory “Cell-Cultured Product” labelling at the Codex Alimentarius, and proposing a one per cent adaptation levy on revenues from cell-cultured products to support African smallholder farmers through the Common Fund for Commodities.

See also  Vehicle imports slide 10% on weak consumer spending

The pact is expected to serve as Africa’s common position at the African Union Summit scheduled for February 2027.

The conference further highlighted Africa’s limited share of the value generated by its cocoa and coffee production, despite the continent’s significant contribution to global output.

According to figures presented by Adegoke, Africa produces about 75 per cent of the world’s cocoa and 12 per cent of its coffee but captures less than six per cent of the value of chocolate, while many farmers earn approximately $1.20 a day.

The Lagos Declaration 2026 commits participants to coordinated action in eight key areas: planning and coordination; unity and governance; farmers’ welfare; productivity; sustainability; traceability and product identity; value addition and finance; and people’s welfare.

Under the declaration, participants pledged to develop African strategic plans with clear responsibilities, timelines, and measurable outcomes. They also committed to strengthening farmers’ cooperatives, improving farmers’ incomes, investing in research and extension services, protecting forests and promoting climate resilience.

The declaration further calls for greater investment in local processing, stronger African brands and expanded access to markets under the African Continental Free Trade Area (AfCFTA).

The commitments are intended to strengthen Africa’s position in global cocoa and coffee value chains, protect farmers’ livelihoods and ensure that a greater share of the value generated by these commodities remains on the continent.

Source: punchng.com

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NNPC awaits reports on PH, Warri refineries’ revival

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The Nigerian National Petroleum Company Limited is waiting for technical assessments from two Chinese firms on Port Harcourt and Warri refineries before proceeding with plans for additional investment agreements.

The NNPC’s Chief Corporate Communications Officer, Andy Odeh, disclosed this in an exclusive interview with our correspondent, following the company’s latest update on the proposed partnership.

The Chinese firms – Sanjiang Chemical Company Limited and Xinganchen (Fuzhou) Industrial Park Operation and Management Co. Limited – have conducted about three months of detailed on-site assessments alongside NNPC’s technical teams.

In its response to questions from The PUNCH, the company said the technical report was being finalised after the assessment, which is expected to establish the work and technology required to make the refineries commercially competitive.

“The prospective partners have carried out approximately three months of detailed on-site assessment with their senior engineers, working alongside NNPC teams. The technical report is being finalised. The assessment is intended to establish what work and technology are needed for competitive operations,“ Odeh said.

The NNPC said it was pursuing a technical equity partnership model to restore the facilities to sustainable operations, stressing that rehabilitation work alone would not guarantee success.

“As the Group Chief Executive Officer, Engr Bayo Ojulari, has explained, successful rehabilitation requires financing, competent engineering and construction, and strong operating capability.

“Completing repairs alone is not enough; the facilities must also be able to operate reliably and profitably,” he noted.

The company said the next steps would involve completing the assessment report, receiving a detailed proposal from the prospective partners and agreeing on the technical and commercial terms.

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“The next milestones are completion of the assessment report, a detailed partner proposal, and agreement on the technical and commercial terms. Definitive agreements, the necessary approvals and an investment decision would then provide the basis for a credible programme for completing work and restarting operations,” it stated.

However, the NNPC said it could not announce a restart date until the requirements had been settled.

“We cannot responsibly promise a restart date before these requirements are settled,” the company said, adding that the assessment was concrete progress but that Nigerians would ultimately judge the initiative by sustained production and reliable product supply.

“We cannot responsibly promise a restart date before these requirements are settled. The engineering assessment is concrete progress, but Nigerians will ultimately judge success by sustained production and reliable product supply. We will continue to communicate verified milestones as the process advances,“ Odeh stated.

The proposed partnership follows the memorandum of understanding signed by the NNPC and the two Chinese firms on 30 April, 2026. The agreement covers the completion of outstanding work, operation and maintenance of the Port Harcourt and Warri refineries, and the assessment of possible upgrades and expansion, including petrochemical opportunities.

The NNPC, however, clarified that the MoU was only a preliminary framework and not a final investment or operating agreement.

At a media parley on 29 September, Ojulari reaffirmed that the company would not proceed with further rehabilitation without a credible route to commercial viability.

The company said the proposed model was intended to bring in partners willing to invest and share responsibility for the refineries’ performance, rather than contractors whose involvement ends after payment for completed work.

See also  FX reserves to hit $51bn by 2026 — CBN

“This is intended to protect public value and avoid repeating arrangements that did not deliver sustained results,” the NNPC stated.

It also clarified that work on the Kaduna refinery had not commenced under the partnership model, noting that the agreement with the Chinese firms covered only Port Harcourt and Warri.

On the impact of the proposed revival on petrol prices, the NNPC said more efficient domestic refining could strengthen supply, increase competition and reduce dependence on imported finished products.

“We understand why Nigerians are asking about our refineries as petrol prices put pressure on household budgets and businesses. Our priority is to restore reliable, commercially sustainable refining capacity while supporting practical relief for customers,“ Odeh noted.

Meanwhile, the NNPC said its retail petrol discount, introduced on 1 October, would continue until 31 October, 2026, as part of efforts to provide temporary relief to customers.

Source: punchng.com

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