The Presidency has clarified the controversy surrounding the ₦3.3 trillion debt settlement plan approved by President Bola Tinubu for power generation companies, insisting the initiative is a structured reform effort rather than a reward for unverified claims.
In a statement, the Presidency said: “The Federal Government of Nigeria is implementing a structured and balanced reform programme to address longstanding financial challenges in the power sector.”
It added: “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 objective is to ensure fairness to operators while also protecting the interest of the Nigerian public.”
The clarification followed concerns raised by Generation Companies over how the government arrived at the reported ₦3.3 trillion figure, with some operators questioning the discrepancy between the approved amount and earlier reconciled industry records.
According to the Presidency, “Between 2015 and 2025, the sector accumulated approximately ₦4.7 trillion in claims across the electricity value chain.” It said that after a stakeholder meeting in July 2025, President Tinubu directed a detailed review of the claims.
“Following a Presidential stakeholder meeting in July 2025, where the claims of N4.7trillion were presented, a thorough review was recommended by President Bola Tinubu. On August 15, 2025, a ₦4 trillion fiscal cap was approved by the Federal Executive Council, following which a comprehensive verification process was undertaken to verify claims. This resulted in a 30 percent reduction in claims, leading to a final negotiated settlement of ₦3.3 trillion, reflecting only valid and contract-backed obligations.”
The Presidency said the repayment is being implemented through a phased financing framework to avoid excessive fiscal pressure. “To ensure sustainability and avoid fiscal pressure, the settlement is being implemented through a phased, market-based financing framework,” the statement said.
It noted that the first series of the programme, valued at about ₦1.23 trillion, is already being rolled out, with ₦501 billion raised from the domestic capital market. So far, ₦223 billion has been disbursed to GenCos and gas suppliers, while ₦197 billion is being processed, largely for gas-related obligations.
The statement also stressed that all payments are conditional. He said: “It noted that all disbursements are phased and conditional, based on verified claims, signed settlement agreements, and completed documentation.”
Providing an update on implementation, the Presidency said that by January 8, 2026, five GenCos covering 14 power plants had signed settlement agreements worth about ₦827 billion, while by March 31, 2026, the number had risen to 17 GenCos covering 17 plants, valued at about ₦2.28 trillion.
“This reflects growing alignment and participation across the sector,” it said. The Presidency added that the debt settlement is being pursued alongside wider reforms in the electricity sector.
“The financial settlement is also being implemented alongside broader reforms designed to strengthen the sector, including targeted support to ensure affordability for poor and vulnerable households, and tariff reforms aligning higher service bands with cost-reflective pricing to support investment and improve service delivery.”
It said the overall goal is to strengthen the sector and improve service delivery nationwide. “The programme is designed to restore liquidity, stabilise generation, improve reliability, and reposition the sector for long-term sustainability. It also reflects a shift from unverified claims to disciplined, transparent, and market-backed obligations.”
The statement further emphasised that the initiative should not be seen as a one-off measure. He said: “The payment is not a one-off intervention but a structured effort to reset the financial and operational foundations of Nigeria’s power sector. The Federal Government remains committed to ensuring that the reforms deliver a stable, reliable, and investable electricity market for the benefit of all Nigerians.”
