The Federal Government has announced it has finalised the implementation framework for a ₦4 trillion government-backed bond intended to pay off verified outstanding debts owed to power Generation Companies (GenCos) and gas suppliers.
The plan, known as the Presidential Power Sector Debt Reduction Plan, was approved by President Bola Ahmed Tinubu and the Federal Executive Council (FEC) in August 2025. It represents the government’s largest financial intervention in the power sector in over a decade.
Aims to Unlock Investment
The primary goal of the debt settlement is to address the severe liquidity crisis and legacy debt overhang that has constrained new investment and hindered reliable power delivery across Nigeria.
- GenCos’ Reaction: Power company owners, including Tony Elumelu (Chairman of Heirs Holdings/Transcorp Power) and Kola Adesina (Group Managing Director of Sahara Group), commended the move, describing it as the first “credible and systematic effort” by the government to tackle the sector’s root challenges.
- Next Steps: The agreement requires bilateral negotiations to finalize comprehensive settlement terms, balancing the government’s fiscal realities with the financial needs of the GenCos.
Restoring Sector Confidence
Olu Verheijen, Special Adviser to the President on Energy, stated that settling the debt is crucial for restoring regulatory trust and attracting large-scale private capital.
She added that the government’s broader focus is on sustainable sector reform, including:
- Closing the metering gap.
- Aligning tariffs with efficient costs.
- Improving subsidy targeting to protect vulnerable populations.
