The Federal Government (FG) and the nation’s electricity Generation Companies (GenCos) have finalised the implementation framework for the Presidential Power Sector Debt Reduction Plan.
This major initiative, approved by President Bola Tinubu, is designed to bring financial stability and boost investor confidence in Nigeria’s struggling electricity market.
The plan involves issuing up to N4 trillion in government-backed bonds to settle verified legacy debts owed to both generation companies and gas suppliers.
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Approved by the Federal Executive Council (FEC) in August 2025, the intervention is the largest of its kind in over a decade and aims to remove a significant debt obstacle that has hampered investment and reliable power supply across the country.
A critical meeting to review the debt settlement arrangements was held in Abuja last week involving the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, the Minister of Power, Bayo Adelabu, and the Special Adviser to the President on Energy, Olu Verheijen, alongside senior GenCo executives.
The participants reached an agreement that commits both sides to bilateral negotiations to develop “full and final settlement agreements.”
These agreements are intended to balance the GenCos’ financial needs with the government’s fiscal realities.
Industry leaders hailed the development
Tony Elumelu, Chairman of Heirs Holdings and Transcorp Power, remarked that the government is, for the first time in years, demonstrating a “credible and systematic effort” to resolve the liquidity crisis in the power sector.
Kola Adesina, Group Managing Director of Sahara Group, echoed this support, stating the initiative “gives us renewed confidence in the reform process.”
According to Verheijen, the debt reduction plan is a strategic market reset that goes beyond simply clearing arrears.
By improving the financial health of the power companies, the intervention is expected to attract new capital for generation capacity and grid modernisation.
She stressed that the focus is on “creating the right conditions for investment” by closing metering gaps, improving subsidy targeting for vulnerable citizens, and aligning tariffs with efficient costs to restore regulatory trust.
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Edun added that the reforms are fundamental to “rebuilding the fundamentals” of the sector to attract sustained private investment, ultimately making reliable power a “catalyst for economic growth.”
The plan is being collaboratively implemented by the Ministries of Finance and Power, the Office of the Special Adviser to the President on Energy, and the Nigerian Bulk Electricity Trading (NBET) Plc.
