President Tinubu approves N3.3 trillion final settlement on legacy power sector debt

• 15 power plants signs settling agreements totalling ₦2.3 trillion.

• Gencos: “We agreed N4 trillion debt owed as at December 2024

• CPPE: “President deserves commendation for paying legacy debt”

A boost for power stability in the country emerged yesterday as President Bola Tinubu yesterday approved the payment of N3.3 trillion as final settlement for legacy debts owed the power sector. The President also approved the payment plan to settle the outstanding debts under the Presidential Power Sector Financial Reforms Programme.

The debt repayment plan followed the final review of the legacy debts that have beset the power sector for more than a decade. The long-standing debts accumulated between February 2015 and March 2025.
In a statement signed by the Special Adviser to the President on Information and Strategy, Bayo Onanuga, the approval follows the verification of the claims.

“₦3.3 trillion has been agreed as a full and final settlement, ensuring a fair and transparent resolution. Implementation has begun, with 15 power plants signing settlement agreements totalling ₦2.3 trillion. The Federal Government has already raised ₦501 billion to fund these payments. Out of the amount, N223 billion has been disbursed, with further payments underway,” the statement read.
Stakeholders maintained that with payments reaching the power value chain, generation will be more stable, and with power plants supported, electricity reliability will improve , and as the sector stabilises, more investment, more jobs, and better service will follow.

“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,” explained Olu Arowolo-Verheijen, Special Adviser on Energy to President Tinubu.

“It is part of a broader set of reforms already underway — including better metering and service-based tariffs that link what you pay to the quality of electricity you receive.
“The government is also prioritising power supply to businesses, industries, and small enterprises — because reliable electricity is critical to creating jobs, supporting livelihoods, and growing the economy.
“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 all stakeholders who supported efforts to resolve the legacy issues in the power sector. He has also confirmed that the next phase (Series II) will begin this quarter.

But the Generation Companies (GENCOs), the main arm of the electricity value chain at the centre of the legacy debt, is shocked at how the final amount of N3.3 trillion was arrived at. For the APGC, there are more questions to be answered. For instance, the body insists that it is in the dark over how the final reconciliation conducted to arrive at N3.3 trillion.

The Managing/Chief Executive Officer, Association of Power Generation Companies (APGC), Dr. Joy Ogaji, argued that as at March 2025, the Generation Companies (GENCOs), Ministry of Finance, APGC, and the Nigerian Bulk Electricity Trading (NBET) company, jointly reconciled all the debt of GENCOs and agreed on N4 trillion as debt owed the sector from 2015 to December, 2024.

“The N4 trillion was what they agreed as of March 2025. That was the last reconciliation. All parties signed off that the debt up till December 2024 is N4trillion and it was the basis for which we had a meeting with the President in July in the State House, where he approved the N4 trillion in the form of cash and bond and asked the Minister of Finance and Debt Management Office (DMO) to go and work with the GENCOs to make sure that the legacy debt, and the legacy debt is 2015 to December 2024, that is legacy debt. So, it is not clear at all.

“And then, another part of the statement said that about 15 generation companies have signed off. I want to tell you that it is five GENCOS that have signed off. The companies that I know that have signed off are NDPHC, FIPL, Mabon, and Geregu. There are only five GENCOS that have signed,” Ogaji said.

For now, the APGC helmsman said: “So, I cannot tell you whether we accept the final settlement of N3.3 trillion or not when we don’t know when they did this reconciliation because it is just she, herself, and herself that are doing the reconciliation. The last reconciliation the GENCOs took part was March 2025. And since that time, we have been asking for new reconciliation so that we can know the current debt because the whole of 2025 has ended. As of March, when they reconciled, we have not even concluded the February invoice for 2025. So, we need to start from 2025 January till date. We need to reconcile that one so that we know how much that is.

“All we are asking for is which reconciliation that brought it down from N4 trillion to N3.3 trillion. When did it take place? And when did all the GENCOs sign off on it that now they will accept N3.3trillion? This N3.3trillion is it in bond, or is it in cash? And when will they pay the GENCOs?” Dr. Ogaji asked rhetorically.

But the Chief Executive Officer, Center for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, heaped praises on the federal government for what he described as “bold step” taken to clear the debts despite the challenging of funding it is facing.
“I think we must commend the President for taking such a bold step, despite all the challenges of funding that the government is dealing with. For a government to give priority to this, it shows that the President and the government itself appreciate how critical this power sector challenge is. So for me it’s a very good development and it shows that the government is responsive to the cries of the citizens that this power sector thing has to be fixed.

On the disputed amount, Yusuf said: “whether the amount is N6 trillion or N3 trillion, we all know what it is when it comes to managing subsidies, because it’s a subsidy, more or less, that the government is making available to sustain the provision of electricity. And historically when we deal with subsidy issues, there are always issues about transparency, about equality of claims and all of that. But N3.3 trillion is a major step forward; it is not small money. I think it’s a major step forward and I think that the stakeholders in the sector should embrace this and work with the government to see how we move the sector forward,” the CPPE boss said.

While acknowledging that there is a need for a major reform in the power sector, Yusuf nonetheless admitted that in this aspect, the President has done very well to clear the legacy debt

“The clearing of the legacy debt will also improve the stability of electricity because what we have had in the last few months is that because of the debt, gas suppliers were not paid. And because gas suppliers were not paid, they were not able to supply gas to the generating companies.

“And because the generating companies don’t have enough power, they are not able to generate. And at a time like this, I think we are depending almost 80 or 90 per cent on the thermal power plants which are using gas. So this will improve liquidity in the value chain, particularly with the gas suppliers and the generating companies.

“And once the liquidity improves, of course we have more power generated and transmitted. So it’s going to have a major significant impact in terms of the provisional improvements in the electricity supply,” Dr. Yusuf concluded.