Federal Government Pays GenCos N1.23trn, Pledges to Avoid Fresh Debts

The federal government has paid about N1.23 trillion of the legacy debts owed to power generation companies (GenCos) through bond issuances, with plans to clear the outstanding balance next year.

The minister of Power, Joseph Tegbe, disclosed this at the Harvard Business School Association of Nigeria (HBSAN) Energy Conference in Lagos.

He said the payment formed part of a broader effort to restore financial stability in the electricity sector, attract investment and improve power supply to homes and businesses.

Tegbe said the government was determined not only to settle the old debts but also to prevent fresh arrears from accumulating.

According to him, this would require reforms to the structure and design of the electricity market, including stronger payment discipline across the value chain.

“We have brought in bonds. We’ve paid about N1.23 trillion successfully, and we plan to finish paying by next year,” the minister said.

The N1.23 trillion was raised through two bond series under the Presidential Power Sector Debt Reduction Programme, which was approved to address long-standing obligations in the power sector. The programme is intended to improve liquidity for GenCos, support gas supply and maintenance, and strengthen confidence among investors.

Tegbe explained that clearing the backlog was only one part of the solution. He said the government would also review the electricity market model to reduce the risk of a repeat of the debt crisis, with a move towards more direct commercial arrangements between suppliers and distribution companies under consideration.

The minister reaffirmed the federal government’s commitment to delivering steady electricity to Nigerians, while ensuring that vulnerable consumers are adequately protected. He said the administration would work to make full use of available generation capacity and build a power sector capable of supporting households, businesses and industries.

According to Tegbe, settling obligations to GenCos and preventing new arrears would help create a more investment-ready sector in line with the mandate of the current administration. He said reliable electricity supply remained central to economic growth, job creation and improved living standards.