The Federal Government has initiated concrete steps to address the longstanding N4 trillion debt owed to power generation companies (GenCos), in a move aimed at stabilizing the country’s electricity sector and restoring investor confidence.
Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, made the disclosure during a press briefing on Wednesday in Abuja. He described the planned debt clearance as part of broader fiscal reforms to ensure liquidity within the energy value chain and stimulate private sector investment in power infrastructure.
“The President has directed us to develop a sustainable framework to clear the outstanding liabilities to GenCos,” Edun said. “This is a critical step in unlocking the bottlenecks affecting power generation and delivery across the country.”
The N4 trillion debt comprises unpaid invoices for electricity supplied to the national grid, capacity charges, and accumulated interest dating back several years. Industry stakeholders have long argued that the debt has crippled the financial viability of GenCos, limiting their ability to expand capacity or maintain existing infrastructure.
According to Edun, the government is considering a combination of bond issuance, special intervention funds, and phased cash settlements. Talks are reportedly ongoing with relevant agencies, including the Nigerian Electricity Regulatory Commission (NERC), the Central Bank of Nigeria (CBN), and the Nigerian Bulk Electricity Trading Plc (NBET).
Energy experts have welcomed the announcement but cautioned against delays. “The GenCos are struggling to stay afloat. A prompt and transparent settlement plan is essential to avoid collapse in power supply,” said Dr. Ayo Fashola, an energy policy consultant.
The move comes amid renewed efforts by the Tinubu administration to reform the power sector, reduce dependency on subsidies, and ensure reliable electricity for industrial growth and economic development.
Further details of the debt repayment strategy are expected to be unveiled in the coming weeks.
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