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The Federal Government has approved a ₦4 trillion debt refinancing plan for Nigeria’s power sector, a move aimed at clearing long-standing arrears owed to power generation companies and improving electricity supply. The decision was announced by the Minister of Finance and Coordinating Minister of the Economy, Mr. Olawale Edun, after the Federal Executive Council (FEC) meeting chaired by President Bola Ahmed Tinubu in Abuja.
The debt relates to unpaid invoices for electricity supplied by 27 power generation companies (GenCos) between 2015 and 2023. Over the years, these debts have discouraged investment in the sector, worsened liquidity issues, and deepened the country’s electricity challenges, which include regular power cuts and slow infrastructure upgrades.
Mr. Edun explained that the refinancing process would start within three to four weeks, with the Debt Management Office (DMO) coordinating the programme. The plan could involve issuing bonds and using other financial instruments to spread repayment over time, ensuring that the government can meet its obligations without creating excessive budgetary pressure.
“It is now fully approved, and we move to implementation,” the minister stated. He added that the approval came after an extensive verification process to confirm the legitimacy of the GenCos’ claims.
This approval builds on an earlier step taken in July, when President Tinubu granted provisional approval for a similar ₦4 trillion bond programme. At that time, government officials said that about ₦1.8 trillion had already been verified by the Nigerian Bulk Electricity Trading (NBET) company, while another ₦200 billion was linked to unfunded electricity subsidies.
In addition to the refinancing, the government has introduced other reforms to stabilise the sector. These include a 35% reduction in electricity subsidies and tariff increases for urban consumers. Officials say these changes will save the government about ₦1.1 trillion each year, freeing up funds for other investments in the power sector and beyond.
The administration believes that clearing the GenCos’ arrears will restore confidence in the market, encourage fresh investments, and improve power generation and distribution. The DMO, working alongside the Ministry of Finance, NBET, and other stakeholders, will supervise the phased payments. External advisers have also been brought in to ensure transparency and adherence to best practices.
Nigeria’s power problems have been a major obstacle to economic growth. Frequent outages have disrupted manufacturing, hindered small businesses, and increased the cost of living. Many Nigerians rely on petrol or diesel generators to keep their homes and businesses running, further straining household budgets.
President Tinubu, who has described electricity as one of humanity’s greatest inventions, stressed that the government will not allow foreclosures on power sector loans and will work closely with banks, GenCos, and Distribution Companies (DisCos) to find fair solutions. “Let’s persevere together,” he said, appealing for cooperation from all parties.
While the plan has been widely welcomed, some analysts warn that debt refinancing alone will not fix the sector’s deep-rooted problems. Issues such as poor billing systems, power theft, weak transmission capacity, and inconsistent gas supply to power plants still need urgent attention. Without addressing these operational gaps, they argue, the refinancing may offer only temporary relief.
Nonetheless, government officials are optimistic that the combination of debt clearance, subsidy cuts, tariff adjustments, and stronger regulation will put the electricity market on a path to stability. Stakeholders will be watching closely to see if the payments translate into improved electricity generation, more reliable supply, and new investments in infrastructure.
If executed successfully, the ₦4 trillion plan could be a turning point for Nigeria’s energy future, providing the foundation for sustainable growth and development in the years ahead.
