FG Pledges To Settle N4trn Power Sector Debt

The federal government has pledged urgent action to resolve the N4 trillion debt threatening Nigeria’s power generation sector, following high-level talks between minister of Power Adebayo Adelabu and the leadership of the country’s Generation Companies (GenCos) in Abuja.

Adelabu assured GenCos that the government would prioritise immediate payment of a substantial portion of the debt, with the balance to be settled through financial instruments such as promissory notes.

He revealed that a meeting between President Bola Tinubu and GenCos executives is being planned to fast-track the process, aiming to stabilise the sector and avert an imminent collapse of national power infrastructure.

“There is a need to pay a substantial amount of the debt in cash. At the minimum, let us pay a substantial amount, then ask for a debt instrument in promissory notes to pay the rest,” Adelabu said, adding that the outstanding balance would be cleared within six months.

The GenCos, led by the chairman of Mainstream Energy Solutions and the Association of Power Generation Companies (APGC), Col. Sani Bello, warned that the N4 trillion debt-comprising N2 trillion for 2024 and N1.9 trillion in legacy arrears-had left them unable to secure loans or maintain infrastructure, posing a critical threat to the entire electricity value chain. “Without urgent intervention, the entire power ecosystem could collapse,” Bello stressed.

Also, chairman of Egbin Power and First Independent Power Limited, Kola Adesina, called the situation a “national emergency,” emphasising that reliable power is essential for industries, homes, and hospitals.

Adelabu acknowledged the government’s role in the sector’s liquidity crisis and pledged not only to clear the debt but also to pursue reforms, including full liberalization of the electricity market and the adoption of cost-reflective tariffs. He stated that targeted subsidies would remain for vulnerable Nigerians, but urged the public to pay the true cost of electricity to ensure the sector’s sustainability.

On her part, CEO of APGC Power, Dr. Joy Ogaji, highlighted other challenges facing GenCos, such as erratic gas supply, chronic payment defaults, and currency volatility, which have severely hampered operations and maintenance.

The government’s renewed commitment comes as GenCos warn of possible nationwide blackouts if the debt remains unresolved, with only about 30 per cent of monthly invoices currently being paid by the government. The Ministry of Power is collaborating with the Ministry of Finance to expedite payment and restore stability to Nigeria’s power sector.