President Bola Ahmed Tinubu has approved a plan to refinance 4 trillion naira ($2.61 billion) in debt primarily owed to 27 power generation companies (Gencos) for outstanding invoices between 2015 and 2023
According to finance minister, Wale Edun, this move has become vital to help stabilize the nation’s ailing power industry and improve supply.
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The Nigerian electricity industry has experienced low investment over the years which has exacerbated chronic power outages in Africa’s most populous nation.
President Bola Tinubu pledged to settle the claims following a recent verification. He approved the plan on Wednesday.
According to Edun who spoke after a cabinet meeting in the capital Abuja, executing the plan will likely involve bond issuances and other instruments to spread out the repayment liability over time under the oversight of the debt management office. This he projected to commence within three to four weeks
“It is now fully approved, and we move to implementation,” Edun said.
Gencos 3 weeks ago expressed concern in a statement over the rising debts owed them by the federal government. Report had it that the debts owed them hit N1.2 trillion in the first half of 2025 alone, with total arrears, including legacy debts of N2 trillion and another N2 trillion in accumulated financial obligation by the federal government in 2024, bringing the total to almost N5.2 trillion.
The Executive Secretary of the Association of Power Generation Companies (APGC) Dr Joy Ogaji, had said that despite meeting and exceeding its available generation capacity requirement, Gencos have never received 100 per cent payment, never had sufficient and guaranteed gas supply by the offtaker; has never been paid as and when due and has never been protected from grid inefficiencies.
Among other issues raised by Gencos was that they are not protected from forex volatility despite increase in their machine maintenance costs with over 90 per cent of their operational cost in dollars due to effects of inefficient grid operations.
The statements added that Gencos continue to bear all the sector risks, including: Unutilised capacity, as even the declared capacity is ignored and not fully utilised; non-adherence to the contract and conditions of services as well as grid instability and high-frequency challenges.
Besides, they listed risks of lenders and banks’ pressure, including host community restiveness as well as instances of overloaded lines, noting that due to aged and weak transmission and distribution system, generated power is rejected or forced to be reduced to match distribution infrastructure.
Following the total amount in the neighborhood of N5.2 trillion as revealed by gencos in the statement, the approved N4 trillion repayment plan is definitely not enough to offset the debts. However, it is a commendable effort by the government. It is expected that there is a follow-up plan for the balance.