President Bola Tinubu has approved a sweeping repayment plan to clear long-standing debts in Nigeria’s troubled power sector, in what officials describe as a decisive step towards stabilising electricity supply and restoring investor confidence.
The plan, announced on Sunday, targets liabilities accumulated between February 2015 and March 2025 under the Presidential Power Sector Financial Reforms Programme. According to a statement by the president’s spokesperson, Bayo Onanuga, a total of ₦3.3tn has been agreed upon as a “full and final settlement” following a verification process.
Implementation is already under way. Fifteen generation companies have signed settlement agreements worth ₦2.3tn, with the federal government raising ₦501bn to kickstart payments. Of this, ₦223bn has been disbursed, with further tranches expected.
Officials argue the intervention will ease liquidity constraints that have long crippled the sector’s value chain — from gas suppliers to generation companies — and, in turn, improve electricity reliability.
“This programme is not just about settling legacy debts,” said Olu Arowolo-Verheijen, special adviser on energy to the president. “It is about restoring confidence across the power sector — ensuring gas suppliers are paid, power plants can keep running, and the system begins to work more reliably.”
The government also signalled broader reforms, including improved metering and service-based tariffs, alongside efforts to prioritise electricity supply to businesses and industries seen as critical to economic growth.
Yet the scale of the challenge remains contested. Industry figures suggest the debt burden is far larger than the amount approved by the government, raising questions about whether the plan can fully resolve the sector’s structural problems.
The chief executive of the Association of Power Generation Companies, Joy Ogaji, recently warned that gas suppliers had already curtailed deliveries to thermal plants over unpaid obligations estimated at ₦3.3tn — a development that has worsened nationwide power shortages.
Ogaji traced the crisis to persistent payment shortfalls by the Nigerian Bulk Electricity Trading Plc, which has struggled to fully settle invoices for electricity generated since the sector’s privatisation.
According to her, the government’s total indebtedness to generation companies has ballooned to nearly ₦6.8tn, with thermal plants—which account for the bulk of Nigeria’s grid power—bearing the brunt.
“From 2015 to December 2024, the debt profile grew to ₦4tn,” she said, adding that monthly shortfalls in 2025 alone contributed an additional ₦2.4tn. “By early 2026, the figure had climbed to about ₦6.8tn and continues to rise.”
The stark discrepancy between official figures and industry estimates underscores the depth of Nigeria’s electricity crisis, where chronic underpayment, tariff constraints and infrastructure gaps have combined to undermine supply.
While the presidency insists the settlement will unlock more stable generation and attract fresh investment, analysts caution that without sustained reforms and cost-reflective tariffs, the sector risks slipping back into the same cycle of debt and underperformance.
Tinubu, who commended stakeholders for backing the initiative, confirmed that a second phase of the programme is expected to commence later this quarter — a sign that the clean-up of Nigeria’s power sector is far from complete.
