Generation companies (GenCos) in Nigeria have criticised the Federal Government’s proposed ₦1.1 trillion 2026 budget for the power ministry, saying it fails to include funds for electricity subsidies, a gap that could worsen the sector’s liquidity crisis.

The budget allocates the bulk of the ₦1.1 trillion to capital projects, including transmission upgrades, distribution recovery, mini-grid initiatives, and rural electrification. However, there is no specific vote for tariff support or subsidy payments, which GenCos say are essential to cover the gap between actual electricity costs and consumer tariffs.

According to the Association of Power Generation Companies (APGC), the federal government spent nearly ₦1.98 trillion on electricity subsidies between October 2024 and September 2025, while legacy debts owed to GenCos exceed ₦4 trillion.

APGC Managing Director, Joy Ogaji, warned that the omission of subsidies transfers financial risk to GenCos and gas suppliers, many of whom are already owed substantial payments. She noted that this could discourage private sector investment and threaten the sector’s stability.

While the Power Minister, Adebayo Adelabu, has argued that broad electricity subsidies are unsustainable, he has proposed targeted support for vulnerable households, reflecting ongoing reform efforts to reduce fiscal burdens.

Experts caution that without a clear subsidy framework, GenCos will struggle to maintain operations, secure gas supplies, and invest in infrastructure, potentially leading to higher electricity costs and unreliable supply for businesses and households.

Boxed Highlights:

• Budget Size: ₦1.1 trillion allocated to the Ministry of Power in 2026, up from ₦900 billion in 2025.

• Subsidy Gap: No specific vote for electricity subsidies included.

• Industry Debt: Legacy debts to GenCos exceed ₦4 trillion.

• Government Position: Shift toward targeted support for low-income households.

• Impact: Risk of rising electricity tariffs, unreliable supply, and reduced private investment.