Nigeria’s electricity sector is often described as broken. Power plants sit idle, consumers complain of unreliable supply, and operators struggle to stay afloat. Yet buried in the financial statements of one power producer is a number that complicates that familiar picture: ₦41.9bn.
That was Geregu Power Plc’s pre-tax profit for 2025, a figure that stands in contrast to the experience of much of the country’s power generation industry. It is not a sign that Nigeria’s electricity market has been fixed. Nor does it suggest that its structural problems have disappeared. Instead, it offers a clearer view of how the market actually works—and why only a small number of companies are able to make money within it.
To understand Geregu’s results, it helps first to understand why so many power producers do not.
A Market Where Power Does Not Guarantee Payment
In Nigeria, generating electricity is only the first step in a long and uncertain commercial process. Power producers sell into a system where payments are delayed, fragmented, and often incomplete.
Invoices issued to the Nigerian Bulk Electricity Trading company and to distribution companies can take months to settle. When payments do arrive, they frequently cover only part of the amount billed. The gap between what is generated, what is invoiced, and what is ultimately paid has become a defining feature of the sector.
For many generation companies, this gap creates a persistent cash-flow problem. Fuel suppliers, staff, lenders, and maintenance contractors must still be paid on time, even when revenue is not. Accounting profits, where they exist, often fail to materialize as usable cash.
When Partial Payments Become Structural
Partial settlement is not an occasional disruption. It is embedded in the way Nigeria’s power market functions.
Distribution companies struggle with collection losses and tariff shortfalls. Those weaknesses are passed upstream. Generation companies receive payments that reflect not the full economic value of the electricity they produce, but what the system is able to recover downstream.
For operators with thin margins or high operating costs, even modest under-settlement can eliminate profitability. In such conditions, producing more electricity does not necessarily improve financial performance. It can, in some cases, deepen losses.
The Weight of Foreign Exchange Exposure
Most of Nigeria’s grid-connected power plants are thermal. While their revenues are denominated in naira, many of their costs are not.
Gas supply contracts often include foreign exchange components. Spare parts, specialist services, and major maintenance work are frequently sourced from abroad. When the naira weakens, these costs rise sharply, while revenue remains unchanged.
Over time, currency volatility has eroded margins across the sector. Plants that are technically sound can become financially fragile simply because their cost base is exposed to exchange-rate movements they cannot control.
Power Without Dispatch
Even when power plants are ready to operate, they are not always allowed to do so.
Nigeria’s transmission grid has limited capacity. As a result, generation companies are sometimes instructed to reduce output or shut down altogether, regardless of fuel availability or operational readiness. Fixed costs continue to accrue during these periods, while revenue falls.
For companies with large debt obligations or high fixed expenses, under-dispatch can be financially destabilizing. Capacity that cannot be evacuated still carries a cost.
Why Some Plants Still Succeed
Despite these constraints, a small number of power plants continue to generate profit. Their success follows a recognizable pattern. They tend to be plants with relatively stable dispatch profiles, allowing them to operate consistently rather than intermittently. Their operations are efficient enough to limit exposure to sudden cost spikes. And their fuel arrangements are manageable, reducing vulnerability to disruptions and price shocks.
This group is small, but it exists. Its presence helps explain why Geregu’s results, while notable, are not inexplicable.
Where Geregu Fits In
Geregu Power Plc’s 2025 financial performance places it firmly within this narrow subgroup. The plant’s scale allows fixed costs to be spread across meaningful output levels. Its dispatch history has been comparatively stable, reducing revenue volatility. And its financial disclosures show a pattern of consistency rather than sharp swings driven by one-off events.
When energy sales increased in 2025, those gains were not offset by exceptional costs, acute currency shocks, or prolonged under-dispatch. The result was a profit figure that reflects operating performance rather than accounting adjustments.
What the Numbers Do—and Do Not—Say
Geregu’s ₦41.9bn pre-tax profit does not signal a turnaround for Nigeria’s electricity sector. It does not imply that tariffs are adequate, collections have improved system-wide, or grid constraints have been resolved. What it does show is something more specific: within a difficult and imperfect market, certain configurations of scale, cost structure, and dispatch economics remain viable. The company’s financial statements do not rely on asset sales or extraordinary income. They reflect the performance of a power plant operating within the same constraints that affect its peers.
A Narrow Window Into a Complex System
In that sense, Geregu’s results are less an exception than a case study. They illustrate how Nigeria’s power market rewards a particular set of operating conditions—and how unforgiving it remains to everyone else.
The ₦41.9bn figure is not a verdict on the sector’s future. It is a snapshot of how the system functions today, and of the limited circumstances under which profitability is still possible.
For readers accustomed to seeing Nigeria’s electricity story framed in terms of failure, it is a reminder that the reality is more uneven—and more revealing—than it first appears.
Explainer: Six Structural Factors That Shape Profitability in Nigeria’s Power Market
Factor 1: NBET (Bulk Power Purchasing and Payment Delays)
Nigerian Bulk Electricity Trading Plc
NBET sits between generation companies (GenCos) and electricity distribution companies (DisCos), purchasing power from the former and selling to the latter. Its role is meant to stabilise the market by aggregating demand and guaranteeing payments.
In practice, NBET’s payment capacity depends almost entirely on how much DisCos remit from customer collections. When DisCos fall short, NBET delays or partially settles GenCo invoices.
Why this matters:
Delayed and incomplete payments weaken cash flow for GenCos, regardless of how much power they generate. Profitability depends not just on sales, but on how much cash ultimately arrives.
Factor 2: DisCos and Weak End-User Collections
Electricity Distribution Companies
DisCos are responsible for delivering electricity to consumers and collecting payment. Structural issues—technical losses, energy theft, metering gaps, and politically sensitive tariffs—mean collections are often far below the value of energy supplied.
This shortfall moves upstream through the system.
Why this matters:
When DisCos under-collect, NBET under-pays, and GenCos absorb the financial impact. Generation performance alone cannot compensate for weak downstream collections.
Factor 3: Partial Settlement as a Structural Feature
Partial settlement occurs when GenCos receive only a portion of the value of electricity supplied. This is not episodic; it is embedded in the market’s design. A GenCo may invoice ₦100 worth of power and receive ₦60–₦70, often after long delays. Meanwhile, fuel, maintenance, staffing, and debt costs remain fixed.
Why this matters:
Plants with thin margins or high operating costs struggle to remain profitable under sustained under-settlement. Only GenCos with sufficient efficiency or scale can withstand it.
Factor 4: FX Exposure on Gas and Maintenance
Most thermal power plants earn revenue in naira but incur costs that are directly or indirectly linked to foreign exchange. These include:
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gas pricing structures with FX components,
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imported spare parts,
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specialist maintenance and technical services.
Currency depreciation raises costs immediately, while revenues remain unchanged.
Why this matters:
FX volatility has been one of the most persistent drivers of margin erosion in the power sector, pushing otherwise viable plants into losses.
Factor 5: Grid Constraints and Dispatch Risk
Transmission Company of Nigeria is a problem. Even when plants are operational and fuel is available, they are not always dispatched. Transmission constraints limit how much power the grid can evacuate, forcing some plants to ramp down or shut in.
Fixed costs continue to accrue during these periods, while revenue falls.
Why this matters:
Stable dispatch is critical to profitability. Plants that are frequently constrained face higher unit costs and weaker earnings.
Factor 6: MYTO, Tariffs, and Government Intervention
Nigeria’s electricity tariffs are guided by the Multi Year Tariff Order (MYTO), which is designed to set cost-reflective tariffs based on inflation, exchange rates, fuel costs, and investment requirements.
In practice, tariff adjustments under MYTO are often delayed, diluted, or suspended due to political and social considerations. The result is a widening gap between:
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the cost of producing electricity, and
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the price consumers are allowed to pay.
This gap is not fully funded through subsidies or budgetary transfers.
Why this matters:
Non-cost-reflective tariffs compress revenues across the value chain. DisCos cannot collect enough, NBET cannot fully pay, and GenCos absorb the shortfall. Profitability becomes the exception rather than the rule.
What These Six Factors Explain
Together, these six factors explain why:
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high generation does not guarantee profit, and
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only a small subset of GenCos can generate consistent earnings.
Geregu’s ₦41.9bn pre-tax profit does not imply that these constraints have been resolved. It indicates that within this framework, certain plants—typically larger thermal assets with stable dispatch, relatively efficient operations, manageable FX exposure, and scale—can still convert electricity sales into profit.
Understanding these six factors explains both sides of Nigeria’s power story: why most GenCos struggle, and why a small number do not.
