The Federal Government of Nigeria and major electricity generation companies (GenCos) have sealed an agreement on the implementation framework for the Presidential Power Sector Debt Reduction Plan, authorizing up to N4 trillion in government-backed bonds to clear long-standing arrears owed to GenCos and gas suppliers, officials announced Tuesday.
The pact, disclosed after a high-level meeting in Abuja on October 7, marks a pivotal step in addressing structural bottlenecks that have plagued Nigeria's power sector since 2015.
As of April 2025, verified government debts to GenCos totaled N4 trillion, prompting earlier threats from the companies to halt operations and potentially trigger nationwide blackouts.
Key figures in the administration—including Minister of Finance and Coordinating Minister of the Economy Wale Edun, Minister of Power Bayo Adelabu, and Special Adviser to the President on Energy Olu Verheijen—convened with GenCos executives to review settlement modalities.
The discussions culminated in a consensus to pursue bilateral negotiations for sustainable repayment deals that align fiscal constraints with the financial pressures on power firms.
"This is more than liquidity relief; it's a reset for the entire market," Verheijen said in a statement, emphasizing the plan's endorsement by President Bola Tinubu and the Federal Executive Council (FEC) in August 2025.
The bonds will target verified arrears, restoring balance sheets and unlocking private investment in generation, transmission, and distribution infrastructure.
Edun highlighted the broader economic ripple effects: "These reforms rebuild fundamentals so Nigeria's power sector serves investors, citizens, and future generations."
Beyond debt clearance, the initiative supports renewable energy scaling, domestic gas utilization as a transition fuel, and local capacity building, aiming to position Nigeria as Africa's premier power market.
The plan, jointly executed by the Ministries of Finance and Power alongside the Presidential Energy Office and the Nigerian Bulk Electricity Trading (NBET) Plc, is described as the largest financial intervention in the sector in over a decade.
It addresses a debt overhang that has stifled investment and contributed to unreliable electricity supply, affecting homes, businesses, and industrial growth.Industry stakeholders welcomed the framework, with one GenCos executive noting it provides "much-needed certainty" amid ongoing challenges like grid instability and funding shortfalls.
Full settlement agreements are expected to be finalized in coming weeks, with bond issuance to follow pending regulatory approvals.
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