FG, GenCos reach agreement on payment of ₦4trn debt

The federal government has finalised implementation frameworks for ₦4 trillion in government-backed bonds to settle verified arrears owed to power generation companies (GenCos) and gas suppliers. The special adviser to the president on energy, Olu Verheijen, disclosed this in a statement issued on Tuesday in Abuja. In the statement signed by Senan Murray, the agreement was reached at a meeting between the federal government officials and the senior executives of GenCos to review settlement modalities for the outstanding debt. Mr Murray, head of the media and communications unit in the SA’s office, said that the meeting was attended by minister of finance and coordinating minister of the economy, Wale Edun, minister of power, Bayo Adelabu, and Ms Verheijen. “The meeting concluded with a consensus on the way forward, which includes conducting bilateral negotiations to finalise full and final settlement agreements that balance fiscal realities with the financial constraints of the GenCos.
“This intervention — the largest in over a decade — addresses a legacy debt overhang that has constrained investment, weakened utility balance sheets, and hindered reliable power delivery across the country.
“This is a major step by the federal government toward restoring financial stability and investor confidence in the electricity market,” Mr Murray said. He said the agreement followed a landmark initiative approved by President Bola Tinubu and the Federal Executive Council to address structural bottlenecks and lay the groundwork for large-scale private sector-led investment and sustained economic growth. According to Mr Murray, during the meeting, Ms Verheijen said that the federal government’s focus was on creating the right conditions for investment by modernising the grid, improving distribution and scaling embedded generation. The special adviser said that the step would also help in closing metering gaps, aligning tariffs with efficient costs, improving subsidy targeting to support the poor and vulnerable, and restoring regulatory trust. “The sector is shifting from crisis response to sustained delivery and building the confidence needed to attract large-scale private capital,” she said. Also at the meeting, Mr Edun said that the reforms were beyond liquidity, as it would help in “rebuilding the fundamentals so that Nigeria’s power sector works for investors, for citizens, and for the next generation.
“This is how we create the enabling conditions for sustained private investment and transform reliable power into a catalyst for economic growth. “Complementary efforts to scale renewable energy, leverage domestic gas as a transition fuel, and build local technical and institutional capacity will position Nigeria not just for energy security, but for energy sovereignty, creating one of Africa’s most attractive power markets.” For his part, Tony Elumelu, chairman of Heirs Holdings and Transcorp Power, noted that for the first time in years, the sector is seeing a credible and systematic effort by the government to tackle the root liquidity challenges in the power sector. He commended Mr Tinubu and his economic team for the bold and transformative step. Speaking in the same vein, Kola Adesina, group managing director of Sahara Power Group, said the initiative was significant in every respect.
According to him, it renews confidence in the reform process and is a clear signal that the government is serious about building a sustainable power sector. Mr Adesina noted that, beyond clearing arrears, the debt reduction plan signalled a strategic reset of Nigeria’s electricity market. The Presidential Power Sector Debt Reduction Plan is being jointly implemented by the federal ministry of finance, the federal ministry of power, and the Office of the special adviser to the president on energy, in collaboration with the Nigerian Bulk Electricity Trading (NBET) Plc and other key stakeholders. NAN