ABUJA, FCT – President Bola Tinubu has rejected a ₦6 trillion debt claim submitted by Power Generation Companies (GenCos), approving instead a verified sum of ₦2.8 trillion to settle legacy electricity debts.
The decision follows a rigorous audit aimed at identifying the true liabilities within the power sector. Sources within the Presidency confirmed that the President insisted on the ₦2.8 trillion figure, maintaining that the federal government would not pay for unverified claims.
Conditions for Debt Payment
The ₦2.8 trillion disbursement is not a blank cheque. The federal government has attached strict conditions to the funds to ensure they directly impact national grid stability:
- Gas Supplier Liquidation: A substantial portion of the approved funds must be utilised by the GenCos to settle outstanding debts to gas suppliers. This move is intended to resolve the persistent fuel shortages that have frequently led to grid collapses.
- Infrastructure Investment: GenCos are required to commit a verified percentage of the payout toward the maintenance and upgrade of their generation plants.
- Phased Release: The government plans a structured disbursement, with an initial ₦600bn to ₦800bn expected to be released between May and July 2026. The remaining balance is slated for payment over the next 12 to 24 months.
Liquidity Crisis in the Power Sector
The GenCos had previously raised alarms over a worsening liquidity crisis, claiming that their debt burden had reached ₦6.5 trillion by February 2026. They argued that without an immediate intervention, they would be unable to service bank loans or maintain critical infrastructure.
While the administration views the ₦2.8 trillion settlement as a necessary step to save the sector from collapse, the move has faced criticism. The Nigeria Labour Congress (NLC) has voiced opposition to the approval, describing the massive payout as an unnecessary strain on the national treasury.
Wider Financial Strategy
To further address the sector’s financial woes, the federal government is reportedly considering a ₦4 trillion bond programme. This long-term financial instrument is designed to mop up the remaining liquidity shortfalls in the power value chain without causing an immediate spike in the national deficit.
