Nigeria’s electricity market continues to grapple with structural payment challenges, as fresh data highlights ongoing remittance failures by a key special customer category. According to a recent report by the Nigerian Electricity Regulatory Commission (NERC), Ajaokuta Steel Company Limited and its host community did not make any payments toward electricity invoices issued in the third quarter of 2025, further compounding liquidity pressures within the power sector.
The regulator disclosed that the unpaid obligations amounted to N1.03 billion owed to the Nigerian Bulk Electricity Trading (NBET) Plc, alongside an additional N0.10 billion due to the Market Operator. The non-payment persists despite repeated invoicing, reinforcing concerns about the sustainability of settlement arrangements involving certain government-linked and special-status customers.
In its commentary, NERC described the situation as part of a long-standing pattern of default. The Commission noted that it has formally communicated the need for intervention to the appropriate Federal Government authorities, underscoring the limitations of regulatory enforcement in resolving payment failures tied to public-sector entities.
The continued non-remittance by Ajaokuta Steel stands in contrast to expectations that reforms in Nigeria’s electricity market would gradually improve payment discipline, particularly among large-volume consumers. Instead, the latest figures suggest that some legacy issues remain unresolved, placing additional strain on an already fragile market structure.
Why remittance performance matters
Payment compliance remains a central challenge in Nigeria’s Electricity Supply Industry (NESI), with far-reaching implications for the entire power value chain. Poor collections reduce available liquidity, limit the ability of power generation companies (GenCos) to recover costs, and ultimately constrain electricity supply. When GenCos are unable to meet financial obligations—such as gas payments and maintenance costs—the result is often reduced generation capacity and increased risk of system instability.
The impact extends beyond generators. NBET, which serves as the central off-taker of electricity from GenCos, relies on remittances from distribution companies and bilateral customers to meet its settlement obligations. Persistent shortfalls weaken NBET’s balance sheet and necessitate periodic government intervention to prevent systemic collapse.
The sharp disparity between the payment performance of domestic bilateral customers and international counterparties has also drawn attention to settlement risks within the market. While some international transactions have shown relatively stronger compliance, recurring domestic defaults highlight structural weaknesses that regulatory measures alone may not be able to resolve.
Understanding bilateral power arrangements
Bilateral customers purchase electricity directly from GenCos, operating outside the central trading pool managed by NBET. These arrangements are intended to promote market efficiency by allowing direct contracting between producers and large consumers. However, the effectiveness of bilateral trading depends heavily on strict payment discipline and enforceable contracts.
In practice, weak enforcement mechanisms and the involvement of politically sensitive entities have undermined the effectiveness of this model. NERC has repeatedly flagged poor remittance performance by certain bilateral customers as a recurring issue, contributing to widespread liquidity constraints across the sector.
Nairametrics has previously reported on NBET’s recurring payment shortfalls, revenue challenges faced by GenCos, and the regulatory steps taken to stabilise the market. Despite these efforts, the persistence of unpaid obligations by some customers suggests that deeper institutional and governance reforms may be required.
Government intervention and recent reforms
In recognition of the scale of payment arrears within the electricity sector, the Federal Government has taken steps to address historical debts. In December 2025, the government issued the first bond under the Presidential Power Sector Debt Reduction Programme, a landmark initiative aimed at clearing outstanding obligations owed to GenCos and gas suppliers.
The N590 billion Series 1 Power Sector Bond was issued through NBET Finance Company Plc, a special purpose vehicle established by the Nigerian Bulk Electricity Trading Plc. The bond issuance marked a significant step toward restoring confidence in the sector and easing the financial pressure on market participants.
However, analysts caution that while debt restructuring initiatives provide temporary relief, they do not address the root causes of recurring non-payment. Without stronger enforcement, improved governance, and sustained political commitment, similar arrears could accumulate again over time.
As Nigeria continues efforts to reform its electricity market, the unresolved payment issues surrounding entities such as Ajaokuta Steel highlight the ongoing tension between policy ambition and operational realities. Addressing these challenges will be critical to improving sector liquidity, attracting investment, and ensuring reliable power supply for the broader economy.
Emmanuel Bassey is a Financial Expert that has worked in the Banking and Finance Industry for over 15+ years across different banks in Nigeria
