President Bola Ahmed Tinubu has approved a ₦3.3 trillion payment plan aimed at settling long-standing debts within Nigeria’s electricity sector, a major policy move the Federal Government says will stabilise power generation, restore investor confidence, and improve electricity supply across the country.
The development was announced in an official statement issued by presidential spokesperson Bayo Onanuga, who explained that the decision followed a comprehensive review of legacy liabilities accumulated between February 2015 and March 2025 under the Presidential Power Sector Financial Reforms Programme.
According to the statement, the government reached an agreement with stakeholders after an extensive verification process to determine the actual value of outstanding obligations owed across the electricity value chain.
“Following verification, ₦3.3 trillion has been agreed as a full and final settlement, ensuring a fair and transparent resolution,” the presidency stated.
Implementation Already Underway
Government officials disclosed that implementation of the settlement programme has already commenced, signalling what authorities describe as a decisive step toward resolving financial bottlenecks that have plagued Nigeria’s power sector for years.
So far, fifteen power generation companies have signed settlement agreements valued at approximately ₦2.3 trillion. Out of the total funding required, about ₦501 billion has already been raised, with ₦223 billion reportedly disbursed to beneficiaries as part of the initial phase.
The administration says the payments are expected to address liquidity challenges affecting electricity producers, gas suppliers, and distribution operations, which have historically struggled with delayed payments and mounting debt obligations.
Restoring Confidence Across the Power Value Chain
The Special Adviser to the President on Energy, Olu Arowolo-Verheijen, described the initiative as a structural reform designed to stabilise the entire electricity ecosystem rather than a one-time financial intervention.
“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 said.
Industry analysts have long argued that unpaid debts within the power sector created a chain reaction affecting generation companies, gas producers, and distribution firms, ultimately contributing to unreliable electricity supply nationwide.
Arowolo-Verheijen noted that the debt settlement forms part of broader reforms being implemented by the administration to improve operational efficiency and service delivery across the industry.
Metering and Tariff Reforms Included
Beyond debt clearance, the government said ongoing reforms include expanding metering infrastructure and implementing service-based tariffs designed to link electricity payments more directly to the quality and reliability of supply received by consumers.
“It is part of a broader set of reforms already underway, including better metering and service-based tariffs that link what you pay to the quality of electricity you receive,” she explained.
Officials believe improved metering will reduce billing disputes, enhance revenue collection, and increase transparency between electricity providers and consumers.
Focus on Economic Growth and Industrial Power Supply
The Federal Government also emphasised that priority would be given to businesses and industrial users, highlighting the critical role of stable electricity in economic productivity, job creation, and investment growth.
“The goal is simple: more reliable power for homes, stronger support for businesses, and a system that works better for all Nigerians,” Arowolo-Verheijen added.
Experts say improved electricity reliability could significantly reduce operational costs for manufacturers and small businesses that currently depend heavily on diesel and petrol generators.
Next Phase to Begin Soon
The presidency confirmed that the next phase of the reform programme, referred to as Series II, is expected to commence within the current quarter. Authorities say this phase will focus on sustaining financial stability and ensuring long-term improvements in electricity generation and distribution.
Officials expressed optimism that clearing accumulated debts would improve liquidity throughout the sector, enabling generation companies to maintain operations, attract investment, and upgrade infrastructure.
Longstanding Sector Challenges
Nigeria’s power sector has faced persistent challenges for decades, including low generation capacity, aging infrastructure, frequent national grid collapses, and widespread power outages affecting households and businesses alike.
A 2024 report by Standard Bank estimated that Nigeria loses approximately $26 billion annually due to electricity shortages, while businesses spend an additional $22 billion each year on alternative energy sources such as generators — costs that significantly weaken competitiveness and economic growth.
Analysts note that resolving financial disputes and restoring payment discipline within the power value chain has been widely viewed as a necessary step toward sustainable electricity reform.
While stakeholders have welcomed the debt settlement initiative, observers say its success will ultimately depend on consistent implementation, regulatory stability, and continued investment in infrastructure upgrades.
As the government begins executing the ₦3.3 trillion settlement plan, expectations are high that the move could mark a turning point for Nigeria’s struggling electricity sector, potentially paving the way for more reliable power supply and stronger economic performance in the years ahead.
