President Bola Ahmed Tinubu has approved a N3.3 trillion settlement plan to clear long-standing debts in Nigeria’s power sector, marking one of the most significant interventions aimed at reviving the troubled industry.
The payment framework, announced on Sunday, targets legacy debts accumulated between February 2015 and March 2025, years marked by underinvestment, tariff disputes, and mounting unpaid obligations across the electricity value chain.
According to Bayo Onanuga, 15 power generation companies have already signed settlement agreements valued at N2.3 trillion.
The federal government has so far raised N501 billion to fund the initiative, with N223 billion already disbursed and additional payments expected in phases.
Nigeria’s power sector has long been weighed down by a cycle of unpaid debts, from distribution companies unable to recover revenues, to generation companies struggling to pay gas suppliers. This has constrained investment and left power plants operating below capacity.
The new settlement aims to restore cash flow across the system, enabling generators to procure gas, ramp up production, and attract much-needed private investment.
Nigeria currently generates less than 4,500 megawatts of electricity for a population exceeding 220 million, forcing businesses to rely heavily on costly diesel generators.
The presidency confirmed that the second phase of the Presidential Power Sector Financial Reforms Programme will begin this quarter, extending the settlement to other verified claims within the N3.3 trillion framework.
Officials describe the figure as a “full and final settlement” following independent verification, aimed at resolving long-standing disputes over sector debts.
However, analysts caution that the success of the intervention will depend on consistent funding and execution, noting that past debt-relief efforts have had limited impact when disbursements fell short.
