The Nigerian Presidency has moved to clarify a contentious plan to settle ₦3.3 trillion in legacy debts owed to power generation companies, saying the approval by President Bola Tinubu is part of a broader effort to stabilise the country’s electricity sector.
The initiative, known as the Presidential Power Sector Financial Reforms Programme, is designed to address long-standing financial bottlenecks that have hampered power generation and distribution. The Presidency confirmed that ₦223 billion has already been disbursed to generation and gas companies, with further payments being made in phased tranches.
The plan has drawn criticism from some stakeholders in the sector, who questioned how the ₦3.3 trillion figure was arrived at and whether it reflects verified claims. In response, the Presidency said the figure emerged from a comprehensive review process initiated after a July 2025 stakeholder meeting, which identified approximately ₦4.7 trillion in sector-wide claims. A ₦4 trillion fiscal cap was subsequently approved, and a detailed verification exercise reduced the final settlement to ₦3.3 trillion, covering only validated, contract-backed obligations.
Implementation is already underway. As of January 8, 2026, five generation companies covering 14 power plants had signed settlement agreements worth about ₦827 billion. By March 31, that number had risen to 17 agreements, spanning 17 plants and valued at approximately ₦2.28 trillion. The government is financing the settlement through a series of market-based instruments, with the first tranche—₦501 billion—already raised from domestic capital markets.
The Presidency emphasised that disbursements are conditional, requiring signed agreements and completed documentation. The reforms are also being paired with measures to protect low-income consumers and align tariffs with service quality to encourage investment.
While some industry representatives, including the Association of Generation Companies of Nigeria, have expressed concern over the lack of consultation, the government maintains that the programme is aimed at restoring liquidity, improving reliability, and repositioning the sector for long-term sustainability. Officials say the settlement is not a one-off payout but a structured intervention to reset the financial and operational foundations of Nigeria’s power industry.
