Power Sector: Nigerian Government, GenCos finalise framework for N4trn debt reduction plan

*President Bola Ahmed Tinubu approves the Presidential Power Sector Debt Reduction Plan to address structural bottlenecks and lay the groundwork for Nigeria’s large-scale private sector-led investment and sustained economic growth

Isola Moses | ConsumerConnect

The Federal Government of Nigeria has taken a major step toward restoring financial stability and investor confidence in the electricity market with the finalisation of the implementation framework for the Presidential Power Sector Debt Reduction Plan.

The Plan is regarded as a landmark initiative President Bola Ahmed Tinubu recently approved to address structural bottlenecks and lay the groundwork for large-scale private sector-led investment and sustained economic growth.

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It is recalled that Mr. Wale Edun, Honourable Minister for Finance and Coordinating Minister for the Economy; Chief Bayo Adelabu, Minister for Power; and Mrs. Olu Verheijen, Special Adviser to the President on Energy, Tuesday, October 7, 2025, in Abuja, met with Senior Executives of Nigeria’s electricity Generation Companies (GenCos) to review settlement modalities for the outstanding debt.

ConsumerConnect gathered the meeting concluded with a consensus on the way forward.

The Federal Government disclosed the consensus includes conducting bilateral negotiations to finalise full and final settlement agreements that balance fiscal realities with the financial constraints of the GenCos.

Approved by President Tinubu and endorsed by the Federal Executive Council (FEC) August this year, the Plan authorises the issuance of up to ₦4 trillion in government-backed bonds to settle verified arrears owed to generation companies and gas suppliers.

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The government said the intervention is the largest in over a decade, as it addresses a legacy debt overhang that has constrained investment, weakened utility balance sheets, and hindered reliable power delivery across the country.

Senan Murray, Media and Communications Unit, Office of the Special Adviser to the President on Energy, also noted in a statement that Mr. Tony Elumelu, Chairman of Heirs Holdings and Transcorp Power, speaking at the meeting, said: “For the first time in years, we are seeing a credible and systematic effort by government to tackle the root liquidity challenges in the power sector.

“We commend President Tinubu and his economic team for this bold and transformative step.”

Mr. Kola Adesina, Group Managing Director of @iamsaharagroup, echoed this sentiment, and said: “This initiative is significant in every respect.

“It gives us renewed confidence in the reform process and a clear signal that the government is serious about building a sustainable power sector.”

Beyond clearing arrears, the debt reduction plan signals a strategic reset of Nigeria’s electricity market.

By restoring the financial health of power companies, it will enable new investment in generation capacity, modernise grid infrastructure, and deliver more reliable electricity to homes and businesses, creating a stronger foundation for industrialisation, job creation, and inclusive economic growth.

Mrs. Olu Verheijen, Special Adviser to the President on Energy, also commented: “Our focus is on creating the right conditions for investment, from modernising the grid and improving distribution to scaling embedded generation.

“By closing metering gaps, aligning tariffs with efficient costs, improving subsidy targeting to support the poor and vulnerable, and restoring regulatory trust, we are shifting from crisis response to sustained delivery and building the confidence needed to attract large-scale private capital.”

Ẹdun also said: “These reforms go beyond liquidity.

“They are about rebuilding the fundamentals so that Nigeria’s power sector works for investors, for citizens, and for the next generation.

“This is how we create the enabling conditions for sustained private investment and transform reliable power into a catalyst for economic growth.”

Complementary efforts at scaling renewable energy, leverage domestic gas as a transition fuel, and build local technical and institutional capacity will position Nigeria not just for energy security, but for energy sovereignty, creating one of Africa’s most attractive power markets.

The Presidential Power Sector Debt Reduction Plan is being jointly implemented by the Federal Ministry of Finance, the Federal Ministry of Power, and the Office of the Special Adviser to the President on Energy, in collaboration with the Nigerian Bulk Electricity Trading (NBET) Plc and other key stakeholders.

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