In a significant step toward stabilizing Nigeria’s power sector, President Bola Ahmed Tinubu’s administration has initiated strategic plans to offset a staggering ₦4 trillion debt owed to power generating companies (GenCos). This development comes as the government intensifies efforts to restore confidence in the nation’s electricity value chain and foster consistent power supply across the country.
The outstanding debt, accumulated over several years, has been a major bottleneck in the operations of GenCos. It has also significantly hampered their ability to maintain existing infrastructure, invest in capacity expansion, and deliver reliable electricity to millions of Nigerians. The inability to fully settle these obligations has created a ripple effect across the electricity supply chain, affecting gas suppliers, transmission companies, and ultimately, the consumers.
During a high-level meeting held in Abuja last week, officials from the Presidency, Ministry of Power, and key industry stakeholders deliberated on pragmatic approaches to resolve the long-standing financial crisis in the sector. The plan, reportedly approved in principle by President Tinubu, will see a phased settlement of the debt owed to GenCos and other critical players in the electricity market.
Presidency sources confirmed that the Tinubu-led government is considering a combination of financial instruments, including promissory notes and special intervention funds, to ensure the gradual liquidation of the debt without putting excessive pressure on the national budget. It is believed that the government may also explore international funding support and private sector partnerships to ease the burden.
Minister of Power, Adebayo Adelabu, speaking after the meeting, emphasized the urgency of addressing the legacy debt issue, describing it as central to the sector’s reform agenda. “We cannot talk about stable electricity without first ensuring that the companies producing power are financially viable,” he said. “This ₦4 trillion debt has constrained GenCos from operating optimally. President Tinubu understands the danger this poses and has directed immediate action.”
Industry analysts argue that this debt resolution plan, if implemented successfully, could mark a turning point for Nigeria’s electricity industry, which has been plagued by chronic underperformance, liquidity shortfalls, and infrastructure decay. Since the privatization of the power sector in 2013, generating companies have struggled to receive full payment for electricity supplied to the national grid. Many of them rely heavily on loans to stay afloat, with some even threatened by insolvency.
Electricity generation in Nigeria currently hovers between 4,000MW and 5,000MW—far below the demand estimated at over 20,000MW. GenCos claim that they have the capacity to generate more power, but the lack of payment for energy supplied and the shortage of gas have limited their output.
A senior executive at one of the GenCos who preferred not to be named said, “We have been crying out for years. The market shortfall is not sustainable. Most of us have had to cut down on maintenance and investment plans. This move by the government is welcome, but we hope it is not just another promise. What we need is action.”
Aside from the debt owed to GenCos, there is also a substantial financial obligation to gas suppliers, who provide the critical fuel for thermal power stations that account for over 70% of Nigeria’s electricity generation. Many gas suppliers have threatened to cut supply due to unpaid invoices, further endangering power availability.
The Nigerian Electricity Regulatory Commission (NERC) has repeatedly expressed concern over the liquidity crisis in the sector. In a recent report, the Commission noted that GenCos receive only about 30 to 40 percent of the market revenue, while the rest is lost due to inefficiencies in billing, collection, and remittance by distribution companies (DisCos). Addressing this imbalance is key to making the sector more attractive for investment.
President Tinubu’s intervention comes as his administration seeks to reposition key sectors of the economy and deliver on its “Renewed Hope” agenda. Power supply has remained one of the most critical challenges for businesses and households in Nigeria, with many relying on diesel generators and alternative energy sources, thereby increasing operational costs.
To complement the debt repayment plan, the government is also expected to unveil a broader reform framework in the coming weeks. This will likely include enforcement of payment discipline among DisCos, tariff adjustments to reflect economic realities, and improved regulatory oversight to restore investor confidence.
Economic experts have lauded the administration’s effort, describing it as a necessary move to unlock Nigeria’s industrial potential. “No serious economy can function efficiently without stable electricity. Settling the GenCos’ debts is the right step if we want to energize industries, create jobs, and improve the quality of life,” said Dr. Thomas Oyedele, an energy economist based in Lagos.
Meanwhile, consumer advocacy groups have called on the government to ensure that any financial bailout to GenCos is matched with improved service delivery. “Nigerians have endured years of darkness and outrageous electricity bills. If GenCos are being paid, then Nigerians must see the impact in better power supply,” said Mrs. Nnenna Eke, spokesperson for the Nigeria Electricity Consumers Forum.
As Nigerians await tangible results, there is cautious optimism that the renewed focus on clearing GenCos’ debts could pave the way for a more stable and efficient power sector—one that can truly support the country’s economic ambitions.
