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Nigeria’s federal government has approved a structured repayment plan to settle N3.3 trillion in outstanding debts owed to power generation companies, President Bola Tinubu’s office announced Sunday, moving to resolve a decade-long financial crisis that had pushed the sector to the edge of shutdown.
Presidential spokesperson Bayo Onanuga said the approval followed a final review of legacy debts accumulated between February 2015 and March 2025. After verification, N3.3 trillion was agreed as full and final settlement — a figure that emerged from a debt the Association of Power Generation Companies had put at approximately N6.5 trillion as recently as February.
The announcement came nearly four weeks after APGC warned that gas firms were preparing to cut off fuel supplies to thermal power plants over the unpaid bills, a move that would have deepened an already severe electricity crisis across the country.
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Implementation is already underway. Fifteen power plants have signed settlement agreements covering N2.3 trillion of the total debt. The federal government has raised N501 billion in initial funding, disbursed N223 billion, and says further payments are in progress. Tinubu said the next phase of the programme — Series II — will commence this quarter.
Onanuga said the long-standing debts had impacted the power sector for more than a decade. “Following verification, N3.3 trillion has been agreed as a full and final settlement, ensuring a fair and transparent resolution,” he said. “Implementation has begun, with 15 power plants signing settlement agreements totalling N2.3 trillion. The Federal Government has already raised N501 billion to fund these payments. Out of the amount, N223 billion has been disbursed, with further payments underway.”
He added that generation would become more stable as payments reached the power value chain, and that electricity reliability would improve as power plants received financial support. The government expects more investment, more jobs and better service to follow as the sector stabilises.
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Speaking on the approval, Tinubu’s special adviser on energy, Olu Arowolo-Verheijen, said the programme extends beyond debt clearance. “This is not just about settling legacy debts,” she said. “It is about restoring confidence across the power sector and ensuring gas suppliers are paid, power plants keep running, and the system begins to work more reliably.”
She said the settlement is part of a broader reform package already underway, including better metering and service-based tariffs that tie what consumers pay to the quality of electricity they receive. The government is also prioritising power supply to businesses, industries and small enterprises, she said, describing reliable electricity as critical to job creation and economic growth.
“The goal of the programme is to provide more reliable power for homes, stronger support for businesses, and a system that works better for all Nigerians,” Arowolo-Verheijen said.
Tinubu commended stakeholders who supported efforts to resolve the legacy issues and described the settlement as central to the administration’s broader energy reform agenda.
The announcement arrives against a backdrop of persistent electricity failures that have frustrated households and businesses across Nigeria. The national grid has suffered multiple collapses since the beginning of the year, and Power Minister Adebayo Adelabu publicly acknowledged in recent weeks that the scale of the sector’s challenges exceeds what the federal government can resolve unilaterally in the near term.
Several states have responded to the prolonged crisis by pursuing independent power solutions. Abia State Governor Alex Otti announced this month that his administration is actively working to detach the state entirely from the national grid, with his commissioner for power currently in the Netherlands negotiating energy deals. Aba, the state’s commercial hub, is already running on independent power supply.
The N3.3 trillion settlement covers liabilities that span a full decade across multiple administrations, reflecting the depth of the financial dysfunction that has long characterised the sector’s value chain — from gas suppliers through generation companies to distribution networks that have consistently collected less revenue than the cost of the power they deliver.
With N223 billion already disbursed and fifteen plants committed to the settlement framework, Sunday’s announcement represents the most concrete financial intervention in the sector in years. Whether the payments sustain their momentum through Series II and beyond will determine whether the approval translates into the stable electricity supply Nigerians have been promised across successive governments.
