The Federal Government announced a ₦3.3 trillion settlement plan for a decade of power sector arrears on Sunday, with 15 generation companies already signed on and ₦223 billion disbursed. But the Association of Power Generation Companies insists the actual debt stands at over ₦6 trillion — raising fundamental questions about who verified the figures, and on what terms.
BY TMN ENERGY CORRESPONDENT | ABUJA BUREAU | APRIL 5, 2026
ABUJA — President Bola Tinubu approved on Sunday a ₦3.3 trillion payment plan to settle long-standing debts owed to power generation companies under the Presidential Power Sector Financial Reforms Programme, in what the Presidency described as a landmark step toward ending a cycle of financial dysfunction that has paralysed Nigeria’s electricity sector for more than a decade.
A statement issued by Bayo Onanuga, Special Adviser to the President on Information and Strategy, said the debts in question accumulated between February 2015 and March 2025, spanning two administrations, and that a final verified figure of ₦3.3 trillion had been agreed as a full and final settlement. Implementation, the Presidency said, has already commenced: 15 power plants have signed settlement agreements totalling ₦2.3 trillion, the Federal Government has raised ₦501 billion to fund the payments, and ₦223 billion has been disbursed, with further tranches described as ongoing. President Tinubu also confirmed that a second phase of the programme — designated Series II — will begin within the current quarter, broadening the scope of the settlement to additional actors across the power value chain.
GenCos Push Back: ‘The Debt Is ₦6 Trillion, Not ₦3.3 Trillion’
The government’s announcement was met with immediate resistance from the sector it was intended to reassure. The Association of Power Generation Companies (APGC), which represents Nigeria’s electricity generation firms, has contested the ₦3.3 trillion figure, arguing that the total legacy debt owed by the Federal Government to generation companies stands at approximately ₦6 to ₦6.5 trillion — nearly double the verified amount the Presidency has agreed to pay.
Dr. Joy Ogaji, Chief Officer of APGC, directed a pointed question at the basis of the settlement figure: “Is verification unilateral in a bilateral agreement?” The challenge goes to the heart of the dispute — whether the government’s verification exercise, which arrived at ₦3.3 trillion as a “full and final” settlement, was conducted in genuine consultation with generation companies or imposed as a fait accompli. The APGC has not accepted the government’s arithmetic, and the gap between ₦3.3 trillion and ₦6-plus trillion represents a contested ₦2.7 to ₦3.2 trillion that generation companies insist they are owed.
The timing of the announcement is also significant. APGC had warned in late February that gas firms were preparing to halt fuel supply to thermal power plants over unpaid debts — a step that would have triggered immediate grid deterioration. Sunday’s announcement appears in part a response to that pressure, though it remains unclear whether the settlement terms are sufficient to prevent further supply-chain disruption.
NLC: GenCos’ Demands Are a ‘Siphoning Scheme’
The dispute between government and generation companies is further complicated by the position of the Nigeria Labour Congress (NLC), which weighed in on the debt question in February with a sharply worded counter-narrative. The NLC described the reported ₦6 trillion demand from GenCos as a “clandestine scheme” to siphon public funds, arguing that the privatisation of the power sector since 2013 has failed to deliver measurable improvements in generation capacity or service reliability.
Central to the NLC’s critique is a striking financial asymmetry: the assets that were privatised — transferred to the current generation and distribution companies — were reportedly acquired for approximately ₦400 billion. Yet the same companies, operating assets now valued at a fraction of their claimed liabilities, are presenting debt demands running into several trillions. The NLC dismissed arguments that it lacked the expertise to engage the electricity market, pointing out that its affiliates include workers inside the sector itself.
Presidency: ‘More Than Debt — Restoring System Confidence’
The Presidency has sought to frame the settlement as something more substantive than a cheque-writing exercise. Olu Arowolo-Verheijen, Special Adviser on Energy to President Tinubu, described the programme as the foundation for a broader structural reset of Nigeria’s electricity market. “This programme is not just about settling legacy debts. It is about restoring confidence across the power sector — ensuring gas suppliers are paid, power plants can keep running, and the system begins to work more reliably,” she stated.
Arowolo-Verheijen pointed to complementary reforms under development: expanded metering programmes, a shift to service-based tariffs that would link consumer payments to the actual quality of electricity received, and a deliberate policy of prioritising power supply to businesses, industries, and small enterprises. The government’s framing positions the debt settlement not as a concession to sector pressure but as the first act of a multi-phase reform sequence — one designed to rebuild the financial integrity of a value chain that stretches from gas field to grid to consumer metering.
A Sector in Structural Distress
Nigeria’s electricity sector has long been one of the country’s most intractable governance failures. Africa Trade Barometer data estimated in 2024 that Nigeria loses approximately $26 billion every year to power failures, with businesses alone spending an estimated $22 billion annually on generators and off-grid diesel to compensate for a national grid that frequently collapses under demand pressure nearly four times its generation capacity.
The debts now being settled are the financial residue of a decade in which gas suppliers went unpaid, generation companies ran without adequate working capital, and distribution companies accumulated deficits of their own — creating a system-wide liquidity trap that made consistent electricity supply structurally impossible regardless of installed capacity. The privatisation of the sector in 2013 transferred operational control to private investors but did not resolve the underlying market distortions: regulated tariffs set below cost-recovery levels, metering gaps that allowed consumption without payment, and a government payment obligation that was never reliably discharged.
The ₦3.3 trillion settlement plan represents the most concrete attempt yet to address the financial dimension of this failure. Whether it succeeds will depend on three factors: whether the payment tranches continue as scheduled; whether the contested debt balance is eventually renegotiated to the satisfaction of the GenCos; and whether the complementary reforms — metering, tariff restructuring, gas supply security — move with sufficient urgency to prevent the same arrears from accumulating again.
Outlook
For now, 15 power plants have signed on, ₦223 billion has moved, and Series II is promised before the end of June. The government’s credibility on this front will be tested not by the headline figure but by the pace and consistency of disbursement in the months ahead — and by whether it can close the ₦2.7 trillion gap with the GenCos before that unresolved dispute becomes the next crisis in a sector that has known little else.