Presidency has clarified the controversy surrounding the ₦3.3 trillion debt settlement plan approved by President Bola Tinubu for power generation companies (GenCos), stating that the initiative is a structured reform effort rather than a reward for unverified claims.
In a statement, the Presidency explained that the Federal Government is implementing a “structured and balanced reform programme” to address longstanding financial challenges in Nigeria’s power sector.
“At the core of this effort is a market-based settlement mechanism designed to restore the sector, not reward accumulated claims that extend beyond verifiable service delivery,” the statement said.
“The objective is to ensure fairness to operators while also protecting the interests of the Nigerian public.”
The clarification follows concerns raised by GenCos over discrepancies between the approved ₦3.3 trillion and earlier reconciled industry claims.
According to the Presidency, the power sector accumulated approximately ₦4.7 trillion in claims between 2015 and 2025. Following a stakeholder meeting in July 2025, President Tinubu directed a comprehensive review of the claims.
Subsequently, on August 15, 2025, the Federal Executive Council approved a fiscal cap of ₦4 trillion, after which a detailed verification process was conducted.
This review led to a 30 per cent reduction in claims, resulting in a final negotiated settlement of ₦3.3 trillion, covering only valid and contract-backed obligations.
To ensure sustainability, the government said the repayment is being implemented through a phased, market-based financing framework.
The first tranche of the programme, valued at approximately ₦1.23 trillion, is already underway. Of this amount, ₦501 billion has been raised from the domestic capital market, with ₦223 billion already disbursed to GenCos and gas suppliers. An additional ₦197 billion is currently being processed, largely for gas-related obligations.
The Presidency emphasised that all disbursements are conditional.
“Payments are phased and subject to verified claims, signed settlement agreements, and completed documentation,” it stated.
Providing further updates, the government disclosed that as of January 8, 2026, five GenCos covering 14 power plants had signed settlement agreements worth ₦827 billion. By March 31, 2026, participation had expanded to 17 GenCos covering 17 plants, with agreements valued at ₦2.28 trillion.
The Presidency noted that the debt settlement is part of broader reforms aimed at strengthening Nigeria’s electricity sector.
These reforms include targeted support for vulnerable households and tariff adjustments aligned with cost-reflective pricing to attract investment and improve service delivery.
“The programme is designed to restore liquidity, stabilise generation, improve reliability, and reposition the sector for long-term sustainability,” the statement added.
It further stressed that the initiative should not be viewed as a one-off intervention but as a comprehensive effort to reset the financial and operational foundations of the power sector.
“The Federal Government remains committed to delivering a stable, reliable, and investable electricity market for the benefit of all Nigerians,” the statement concluded.
