President Bola Ahmed Tinubu has approved a comprehensive payment plan to settle longstanding debts in Nigeria’s power sector, marking a major step toward restoring stability and investor confidence in the country’s electricity value chain.
The initiative, implemented under the Presidential Power Sector Financial Reforms Programme, follows a final review of legacy debts accumulated over a decade, from February 2015 to March 2025. After verification, the federal government agreed on N3.3 trillion as a full and final settlement, aimed at resolving persistent financial bottlenecks that have undermined power generation and supply.
Execution of the repayment plan is already underway, with 15 power generation companies (GenCos) signing settlement agreements valued at approximately ₦2.3 trillion.
To support the rollout, the federal government has raised N501 billion, out of which N223 billion has been disbursed, with additional payments in progress. The phased disbursement is expected to ease liquidity constraints across the sector, particularly for generation companies and gas suppliers.
Analysts note that the debt overhang has long been a major structural weakness in Nigeria’s electricity market, limiting investment inflows and constraining service delivery.
With the settlement process now in motion, expectations are rising that improved cash flow across the value chain will translate into more stable electricity generation and enhanced reliability of supply.
The government also sees the initiative as a catalyst for broader economic benefits, including increased private sector participation, job creation, and improved service delivery for households and businesses.
Speaking on the development, Olu Arowolo-Verheijen, special adviser on energy to the president, described the programme as a critical intervention to rebuild trust within the sector.
“This programme is not just about settling legacy debts. 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,” she said.
She added that the debt settlement forms part of a wider reform agenda, including improvements in metering and the implementation of service-based tariffs that align electricity pricing with quality of supply.
The administration said it is also prioritising power supply to key economic segments, including industries, manufacturers, and small businesses, where reliable electricity is seen as essential for productivity and growth.
According to Arowolo-Verheijen, the reforms are designed to create a more efficient and commercially viable electricity market.
“The goal is simple: more reliable power for homes, stronger support for businesses, and a system that works better for all Nigerians,” she added.
President Tinubu has commended stakeholders across the power value chain for their role in advancing the reform programme and resolving long-standing financial disputes.
He also confirmed that the next phase of the initiative, Series II, is set to commence this quarter, signalling the government’s intention to sustain momentum in addressing structural challenges in the sector.
