President Bola Tinubu has approved a N3.3 trillion plan to settle longstanding debts across Nigeria’s electricity value chain, in a bid to stabilise generation and restore investor confidence in the sector.
The decision, covering liabilities accumulated between February 2015 and March 2025, was disclosed in a statement issued on Sunday, April 5, 2026, by presidential spokesperson Bayo Onanuga. The approval follows a final audit and verification process under the Presidential Power Sector Financial Reforms Programme.
Implementation has already begun, with initial disbursements reaching stakeholders including generation companies, according to the statement.
The Federal Government said the settlement represents a “full and final” resolution of verified legacy debts, a key constraint that has weakened liquidity across the power market for over a decade. The arrears have strained relations between electricity producers, gas suppliers and distribution companies, often leading to plant shutdowns and reduced output.
About N2.3 trillion of the total has been tied to agreements signed with roughly 15 generation companies, while the government has so far mobilised N501 billion to kick-start payments. Of that amount, N223 billion has already been disbursed, with further releases ongoing.
Officials said the phased structure is designed to ensure transparency and accountability, while injecting much-needed liquidity into the system.
“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,” said Olu Arowolo-Verheijen.
She added that the initiative forms part of broader structural reforms, including improvements in metering and the rollout of service-based tariffs that align electricity pricing with supply quality.
“The government is also prioritising power supply to businesses, industries and small enterprises, because reliable electricity is critical to job creation and economic growth,” she said.
The intervention comes against the backdrop of a deepening liquidity crisis in Nigeria’s power sector, where generation companies are burdened by an estimated N6.8 trillion in unpaid obligations. The funding gap has constrained maintenance, limited access to gas, and weakened overall generation capacity.
Authorities expect that clearing a portion of these arrears will improve cash flow across the value chain, enabling more consistent power generation and more reliable electricity supply for households and businesses.
The latest move builds on earlier financing efforts. In October 2025, the government concluded a framework for a proposed N4 trillion government-backed bond aimed at settling outstanding obligations to generation companies and gas suppliers. That proposal drew criticism from some stakeholders who warned it risked replacing one layer of debt with another.
Industry operators have also pushed back on aspects of the reconciliation process. Generation companies previously rejected suggestions that N2.8 trillion constituted a final settlement figure, describing such claims as inaccurate and calling for a more transparent validation of claims.
Despite those concerns, the government maintains that the current N3.3 trillion figure reflects a comprehensive and independently verified assessment of liabilities.
Analysts say the success of the programme will depend not only on timely disbursement but also on sustained reforms to prevent a recurrence of arrears. Persistent shortfalls in tariff collection, transmission constraints and operational inefficiencies have historically undermined the sector’s financial viability.
For now, the injection of funds is expected to ease immediate pressure on generation companies and improve their ability to meet operational costs, particularly gas supply obligations.
The administration says its broader objective is to create a financially sustainable power market, where cost recovery aligns with service delivery and private capital can return to the sector.
If effectively implemented, the settlement could mark a turning point for an industry widely seen as central to Nigeria’s economic growth but long constrained by structural and financial bottlenecks.