A Nigerian receiver has been appointed by lenders to KEPCO Energy Resources and its subsidiary, Egbin Power, two major players in the power sector, adding to worries about the industry's financial health, a notice in local media said.

KEPCO owns 70% of Egbin Power, Nigeria's biggest electricity generator. The news comes as the sector faces a cash crisis estimated at 2 trillion naira ($1.31 billion).

The receiver/manager Kunle Ogunba, a lawyer, was appointed by a trustee to KEPCO's lenders on June 19, the notice said.

The power companies denied the notice and said the matter was in court. The companies have asked a court to halt the appointment, according to court papers seen by Reuters.

Power firms in Nigeria have been struggling after the sector was privatised more than a decade ago. This raises concerns about the future of private investment, especially for upgrading the country's power grid and adding renewable energy.

Many of the companies were bought using loans after the 2013 privatisation. Now, banks are focusing on recovering debts instead of lending more money.

The move has sparked fresh debate about the viability of Nigeria's electricity market, the role of government support, and whether private companies can succeed in the sector.