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.