Presidency Provides Detailed Explanation of ₦3.3 Trillion Power Sector Debt Settlement
The Presidency has issued a comprehensive clarification regarding the controversial ₦3.3 trillion debt settlement plan approved by President Bola Tinubu for power generation companies, emphasizing that this initiative represents a structured reform program rather than a simple reward for unverified financial claims.
Structured Reform Program Addresses Longstanding Challenges
In an official statement, the Presidency declared: "The Federal Government of Nigeria is implementing a structured and balanced reform programme to address longstanding financial challenges in the power sector." The administration further explained that "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 clarification comes in response to concerns raised by Generation Companies regarding how the government arrived at the reported ₦3.3 trillion figure, with some operators questioning discrepancies between the approved amount and earlier reconciled industry records.
Verification Process Reduced Claims by 30 Percent
According to the Presidency, between 2015 and 2025, the power sector accumulated approximately ₦4.7 trillion in claims across the entire electricity value chain. Following a presidential stakeholder meeting in July 2025 where these claims were presented, President Tinubu directed a thorough review of the financial obligations.
The statement detailed: "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."
Phased Implementation Framework Ensures Sustainability
The Presidency emphasized that the repayment is being implemented through a phased financing framework designed to avoid excessive fiscal pressure on the national economy. "To ensure sustainability and avoid fiscal pressure, the settlement is being implemented through a phased, market-based financing framework," the statement confirmed.
Currently, the first series of the program valued at approximately ₦1.23 trillion is already being rolled out, with ₦501 billion successfully raised from the domestic capital market. So far, ₦223 billion has been disbursed to Generation Companies and gas suppliers, while ₦197 billion is being processed, primarily for gas-related obligations.
Conditional Payments Based on Verified Documentation
The Presidency stressed that all disbursements are strictly conditional, requiring verified claims, signed settlement agreements, and completed documentation before any payments are released. This approach ensures accountability and transparency throughout the settlement process.
Providing implementation updates, the statement revealed that by January 8, 2026, five Generation Companies covering 14 power plants had signed settlement agreements worth approximately ₦827 billion. By March 31, 2026, participation had expanded significantly to 17 Generation Companies covering 17 plants, with agreements valued at about ₦2.28 trillion.
"This reflects growing alignment and participation across the sector," the Presidency noted, highlighting increasing industry cooperation with the reform initiative.
Broader Sector Reforms Accompany Financial Settlement
The debt settlement program is being pursued alongside wider reforms in Nigeria's electricity sector designed to strengthen operational foundations and improve service delivery nationwide. These complementary measures include targeted support to ensure affordability for poor and vulnerable households, along with tariff reforms aligning higher service bands with cost-reflective pricing to support investment and enhance service delivery.
The Presidency emphasized: "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."
Not a One-Off Intervention but Structural Reset
The statement further clarified that this initiative should not be viewed as a one-off measure but rather as a structured effort to reset the financial and operational foundations of Nigeria's power sector. "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 Presidency declared.
The Federal Government remains committed to ensuring these reforms ultimately deliver a stable, reliable, and investable electricity market that benefits all Nigerian citizens through improved power generation and distribution across the nation.
