GenCos gain stronger revenue from bilateral power sales
Nigeria’s Power Generation Companies are finding a growing source of stable revenue through direct electricity sales to domestic bilateral customers, as fresh market data showed that buyers under bilateral contracts remitted N5.82bn out of N6.12bn billed in the first quarter of 2026 for ancillary services and direct bilateral electricity sales.
Findings by The PUNCH from the Nigerian Electricity Regulatory Commission’s First Quarter 2026 Report showed that domestic bilateral customers remitted N5.82bn out of N6.12bn billed between January and March 2026, representing a 95 per cent payment performance and highlighting the growing importance of bilateral contracts as an alternative source of revenue for electricity generation companies.
“The domestic bilateral customers made a cumulative payment of N5,816.28 million against the invoice of N6,122.35 million issued to them by the MO for services rendered in 2026/Q1, translating to 95.00 per cent remittance performance. It is noteworthy that, during Q1 2026, three international and nine domestic bilateral customers made payments of $6.64 million and N2,589.07 million, respectively, towards outstanding MO invoices from previous quarters,” the report read.
The direct electricity supply agreements with domestic bilateral customers have helped to sustain their operations as persistent payment shortfalls and mounting debts in Nigeria’s electricity market continue to squeeze their finances.
The development comes at a time when generation companies have repeatedly warned that the industry’s worsening liquidity crisis, driven largely by unpaid government subsidy obligations and market payment shortfalls to GenCos, which stood at 39 per cent in 2025, is threatening their ability to continue producing electricity.
Unlike electricity sold through the conventional wholesale market, bilateral transactions involve direct commercial agreements between generation companies and eligible domestic customers, including distribution companies and industrial users, allowing GenCos to negotiate and recover payments directly from buyers.
Our correspondent gathered that the customers purchase excess electricity generated by power plants that is not needed in the regular electricity market. Payments for the electricity are remitted by the generation companies to the Market Operator on behalf of the customers.
An analysis of the NERC report showed that domestic bilateral customers received invoices worth N6.122bn during the first quarter of 2026 and remitted N5.816bn, leaving an outstanding balance of about N306m.
Compared with the preceding quarter, invoices issued to domestic bilateral customers rose from N4.17bn in the fourth quarter of 2025 to N6.12bn in the first quarter of 2026, representing an increase of approximately 46.7 per cent. Collections grew even faster.
Remittances increased from N3.51bn to N5.82bn, translating to a 65.5 per cent increase within one quarter. The improvement also lifted overall payment performance by 10.77 percentage points, from 84.23 per cent to 95 per cent, while outstanding unpaid invoices dropped from roughly N658m in the fourth quarter of 2025 to about N306m in the first quarter of 2026.
The report showed that several bilateral customers fully settled their invoices during the review period. Among the largest was Mainstream/PRISM, which paid N2.234bn in full, compared to N1.883bn in the preceding quarter.
Mainstream/MBELT EKEDC also achieved a 100 per cent payment performance after settling N1.253bn, while Zungeru/Youngxing fully paid its N917.89m invoice.
Other customers that recorded complete payment included Mainstream/PHEDC, Mainstream/JEDC, Mabon/KEDCO, NDPHC/Orashi, Sapele/Phoenix and NDPHC/Sunflag.
The report further showed improvements among customers that had struggled with remittances in previous quarters.
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For instance, Taopex/KAM INT remitted N140.12m out of its N232.64m invoice, representing 60.23 per cent performance. Although still below full compliance, it marked a significant turnaround from the previous quarter when no payment was recorded despite an invoice of N264.31m.
Likewise, Trans Amadi (FMPI) improved from zero remittance in the fourth quarter of 2025 to paying N6.76m, representing 64.09 per cent of its first-quarter invoice.
However, not all customers recorded improved performance. Omotosho II/Pulkit maintained a payment performance of about 72 per cent, remitting N20.85m out of N28.93m billed, while Alaoji/APLE recorded no payment against its N122.88m invoice during the quarter.
Similarly, Trans Amadi (OAU) failed to make any payment on its N66.72m invoice, while NDPHC/Weewood also recorded zero remittance against N12.24m billed.
One of the most remarkable improvements came from North South/Star P, which moved from zero remittance in the fourth quarter of 2025 to achieving full payment in the first quarter of 2026, settling N36.53m against an invoice of N36.45m.
The improved performance comes as electricity generation companies continue to push for the settlement of debts owed to them by the Federal Government and participants in the Nigerian Electricity Supply Industry.
The performance suggests that payment discipline among domestic bilateral customers is steadily improving despite pockets of persistent defaults.
The stronger remittance profile is expected to improve cash flow to electricity generation companies, strengthen liquidity within the Nigerian Electricity Supply Industry and reduce the long-standing revenue shortfalls that have constrained investment across the power value chain.
The Association of Power Generation Companies has repeatedly warned that GenCos are burdened by huge outstanding invoices arising from electricity supplied to the national grid but not fully paid for because of tariff shortfalls, market liquidity challenges and unpaid subsidy obligations.
According to the association, these mounting debts amounting to N6tn have constrained the ability of generation companies to maintain plants, service loans, procure gas and invest in additional generation capacity.
Operators have consistently argued that while electricity producers continue to generate power, they receive only a fraction of the value of energy supplied into the national grid because the market is unable to fully settle their invoices.
Against this backdrop, bilateral contracts have become an increasingly important revenue stream, providing generation companies with a more reliable source of cash flow outside the traditional bulk electricity payment framework.
The sustained improvements in bilateral payment performance could help ease liquidity pressures on generation companies, strengthen investor confidence and support the financial sustainability of the Nigerian Electricity Supply Industry, even as stakeholders continue to press the Federal Government to clear legacy debts owed to electricity producers and implement reforms aimed at restoring the financial health of the sector.(The PUNCH)
