Tinubu approves payment of ₦3.3 trillion to settle power sector debt

Just days after Pulse reported on Nigeria’s worsening electricity crisis and the sector’s growing funding gap, the Federal Government has moved to tackle one of its biggest underlying electricity debt problems.

President Bola Ahmed Tinubu has now approved a sweeping ₦3.3 trillion plan to clear long-standing liabilities in the power sector, with ₦501 billion already raised and ₦223 billion disbursed so far.

This development was announced in a statement issued on Sunday by the presidential spokesperson and President’s Special Advisor,  Bayo Onanuga.

The move is said to be part of the Presidential Power Sector Financial Reforms Programme aimed at stabilising Nigeria’s fragile electricity market.

According to the presidency, the liabilities accumulated over 10 years, from February 2015 to March 2025, reflect underpayments to power generation companies (GenCos), tariff shortfalls, and persistent inefficiencies across the electricity value chain.

Onanuga said the debts were thoroughly reviewed and verified, with ₦3.3 trillion agreed to as a "full and final settlement." 

The debt burden has long been a major constraint on the sector, with GenCos repeatedly warning of possible shutdowns due to unpaid invoices and rising operational costs. 

This electricity challenge has also significantly limited investment and worsened infrastructure gaps across the sector, leading to erratic electricity supply, frequent grid collapses, and continued reliance on expensive alternatives such as diesel and petrol generators and solar inverters. 

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Implementation has already started and is at scale. So far, 15 power generation companies have signed settlement agreements worth ₦2.3 trillion, a significant portion of the total debt, according to the presidency.

To fund the payments, the Federal Government has raised ₦501 billion through bonds and has already disbursed ₦223 billion to beneficiaries, with additional payments ongoing.

The approval comes months after a sharp pushback from the Nigeria Labour Congress over calls for financial support in the power sector.

In February, the union criticised reports that power generation companies were seeking as much as ₦6 trillion in government intervention, describing the move as an attempt to draw public funds under the cover of sector reforms.

The NLC also accused the Association of Power Generation Companies of pushing for what it called an unjustified bailout, arguing that the privatisation of the electricity sector has not translated into better power supply or increased generation capacity.

At the centre of the disagreement was the Federal Government’s reported plan at the time to consider a ₦3 trillion support package for generation companies.

The labour body pushed back against suggestions that it lacked the technical knowledge to weigh in on the issue, noting that many of its members work in the electricity sector and understand its challenges firsthand.

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It also raised concerns about value for money, pointing out that assets acquired for around ₦400 billion during privatisation are now tied to funding demands running into trillions, despite what it described as little improvement in output over the years.

“This is not economics; this is plunder. They call it business, but we call it a heist,” NLC President Joe Ajaero said at the time.

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In all, this plan could mean a more stable electricity supply, fewer grid collapses, and economic improvements across sectors. 

While the figures are significant, Nigeria has seen similar interventions before, often with limited long-term impact due to structural inefficiencies.

This time, the Tinubu administration says it is taking a more comprehensive approach. A second phase of the reform programme, known as Series II, is expected to begin later this quarter.

For now, the success of the ₦3.3 trillion plan will depend less on the announcement and more on whether the reforms behind it are sustained.