FG, GenCos seal framework for ₦4trn power sector debt reduction plan

By Kunle Sanni –

The Federal Government of Nigeria has finalized the implementation framework for the ₦4 trillion Presidential Power Sector Debt Reduction Plan, a major initiative aimed at restoring financial stability and investor confidence in the nation’s electricity market.

The plan, approved by President Bola Tinubu and endorsed by the Federal Executive Council (FEC) in August 2025, authorizes the issuance of government-backed bonds to settle verified arrears owed to electricity generation companies (GenCos) and gas suppliers. It represents the most significant intervention in the sector in over a decade.

A high-level meeting held on October 7, 2025, in Abuja brought together the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun; the Minister of Power, Chief Bayo Adelabu; and the Special Adviser to the President on Energy, Mrs. Olu Verheijen, alongside senior executives of the GenCos. Discussions focused on the modalities for settlement, with both parties agreeing to bilateral negotiations that will result in final agreements balancing fiscal realities and the GenCos’ financial constraints.

“For the first time in years, we are seeing a credible and systematic effort by government to tackle the root liquidity challenges in the power sector,” said Mr. Tony Elumelu, Chairman of Heirs Holdings and Transcorp Power. “We commend President Tinubu and his economic team for this bold and transformative step.”

Echoing this, Mr. Kola Adesina, Group Managing Director of Sahara Group, said, “This initiative gives us renewed confidence in the reform process and sends a clear signal that the government is serious about building a sustainable power sector.”

The plan is expected to reset Nigeria’s electricity market by restoring the financial health of power companies, unlocking new investment in generation and grid infrastructure, and ultimately improving electricity supply to homes and businesses.

“Our focus is on creating the right conditions for investment,” said Mrs. Verheijen. “From modernizing the grid to closing metering gaps and ensuring tariffs reflect efficient costs, this plan marks a shift from crisis response to sustained delivery.”

Mr. Edun added that the reforms go beyond clearing arrears. “They are about 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.”