Emmanuel Addeh in Abuja
Generation Companies (Gencos) lost an estimated N110.56 billion in capacity payments in the first six months of 2026 as an average 3,124.50MW of generation capacity remained stranded every month, according to data made public by the Association of Power Generation Companies (APGC).
The figures showed that although the Gencos had an average available generation capacity of 7,260MW between January and June, only 4,581.5MW was declared available for generation, while actual average generation stood at 4,196.83MW.
Essentially, stranded generation capacity refers to electricity generating capacity that is technically available or capable of being produced by power plants but cannot be fully utilised because there is insufficient demand from the grid, transmission constraints, distribution limitations or other system restrictions.
The APGC data indicated that the 3,124.50MW average stranded capacity represented about 43 per cent of the 7,260MW average available generation capacity during the six-month period, while it was equivalent to about 68.2 per cent of the 4,581.5MW average declared generation capacity.
Similarly, the 4,196.83MW average generation recorded during the period represented only about 57.8 per cent of the 7,260MW average available capacity, leaving more than 42 per cent of available capacity unused when measured against actual average generation.
A THISDAY analysis of the month-by-month figures showed that January recorded available generation capacity of 7,283MW, of which 5,033MW was declared, while average generation stood at 4,541MW. Stranded capacity was 2,985MW, resulting in a monthly capacity payment loss of N18.10 billion.
In February, available capacity increased to 7,492MW, the highest level recorded during the period. However, declared capacity fell to 4,476MW, while average generation dropped to 4,218MW. Stranded capacity consequently rose to 3,274MW, with the associated capacity payment loss put at N17.93 billion.
March recorded the worst performance in terms of stranded capacity and financial loss. While available capacity stood at 7,408MW, only 4,221MW was declared, while average generation fell to 3,883MW. Stranded capacity climbed to 3,650MW, representing 49.3 per cent of available capacity and the highest level in the six-month period.
The March figure was accompanied by the highest monthly capacity payment loss of N22.13 billion, accounting for about 20 per cent of the N110.56 billion total loss recorded during the period.
For years, Gencos have complained that they incur substantial fixed and operational costs whether or not the electricity they are capable of generating is taken by the grid, thereby losing potential revenue from electricity that could otherwise have been sold, while still bearing costs associated with maintaining their plants, servicing investments and keeping generating units available.
Although Nigeria has substantially invested in generation capacity, it cannot always be fully utilised because transmission and distribution networks have not expanded at the same pace. Consequently, Gencos have repeatedly argued that improvements in transmission capacity, distribution infrastructure, sector liquidity and contractual arrangements are necessary to ensure that available generation is evacuated and paid for.
But the situation improved in April, when available capacity stood at 7,358MW, declared capacity rose to 4,529MW and average generation increased to 4,165MW. Stranded capacity declined to 3,193MW, while capacity payment loss fell to N18.74 billion.
In the same vein, May produced the lowest stranded capacity and financial loss during the period. Available generation capacity fell to 7,015MW, the second-lowest monthly figure, while declared capacity increased to 4,698MW and average generation rose to 4,305MW.
Besides, stranded capacity dropped sharply to 2,710MW, equivalent to 38.6 per cent of available capacity, while capacity payment loss fell to N16.43 billion.
In June, available capacity declined further to 7,004MW, the lowest level in the six months. Declared capacity stood at 4,532MW, while average generation fell to 4,069MW. Stranded capacity increased to 2,935MW, with the associated capacity payment loss rising to N17.22 billion.
However, the six-month data also showed that the highest available capacity of 7,492MW in February did not translate into the highest generation. Average generation that month was 4,218MW, while March, despite having lower available capacity of 7,408MW, recorded an even lower 3,883MW average generation.