The Presidency has clarified the rationale behind President Bola Tinubu’s approval of a ₦3.3 trillion plan to settle verified legacy debts owed to power generation companies (GenCos), describing it as a critical step to stabilise Nigeria’s electricity sector.
The settlement, covering debts accumulated between February 2015 and March 2025, is part of the Presidential Power Sector Financial Reforms Programme aimed at improving liquidity, strengthening the grid, and enhancing power supply.
In a statement by presidential spokesman Bayo Onanuga, the government said the initiative is not a bailout but a structured, market-based mechanism tied strictly to verified and contract-backed obligations.
According to the Presidency, the power sector had accumulated about ₦4.7 trillion in claims over the period. However, after a review ordered by Tinubu and a ₦4 trillion fiscal cap approved by the Federal Executive Council, the claims were pruned by 30 percent, resulting in the final ₦3.3 trillion settlement figure.
The government stressed that the process is designed to ensure fairness, eliminate inflated claims, and protect public interest while addressing long-standing financial bottlenecks in the sector.
Implementation has already commenced. About ₦223 billion has been disbursed to GenCos and gas suppliers, while an additional ₦197 billion is being processed. The payments are being made in phases and are conditional on verified claims, signed agreements, and complete documentation.
So far, multiple GenCos have signed settlement agreements running into trillions of naira, reflecting what the Presidency described as growing industry alignment with the reform programme.
The government added that the settlement is being financed through a phased framework, including capital market instruments such as the recently announced ₦501 billion power sector bonds.
Despite the clarification, concerns persist within the industry. The Chief Executive Officer of the Association of Power Generation Companies, Joy Ogaji, questioned the methodology used to arrive at the ₦3.3 trillion figure, noting discrepancies with previously reconciled records and alleging inadequate consultation with operators.
Responding, the Presidency maintained that the programme marks a shift from unverified claims to a transparent, disciplined system that prioritises sustainability. It added that the reform also includes targeted subsidies for vulnerable consumers and tariff adjustments aligned with service delivery levels.
The government reiterated that the initiative is not a one-off payment but part of a broader strategy to restore liquidity, improve reliability, and reposition Nigeria’s power sector for long-term investment and growth.
