As part of efforts to avert imminent collapse of the power sector, the Federal Government has pledged immediate action to reduce the N4 trillion debts owed to power generation companies.
GenCos had in April warned that power plants across the country were facing imminent shutdown over a huge N4 trillion debt owed by the Federal Government.
The companies said they were currently owed N2 trillion for power supplied in 2024 and N1.9 trillion in legacy debts.
The government on Sunday vowed to urgently address the debt issue crippling Nigeria’s power generation sector, following high-stakes talks between Minister of Power, Adebayo Adelabu and the chairmen of power generating Companies in Abuja.
A statement by the Special Adviser, Strategic Communications and Media Relations to the Minister of Power, Bolaji Tunji explained that the move aims to avert an imminent collapse of the power infrastructure in the country.
The Minister assured GenCos executives that the government would prioritize immediate payment of a significant amount out of the N4 trillion debts while the balance would be defrayed through other debt instruments.
He said this would be proposed in a meeting being planned between President Bola Tinubu and GenCos’ leadership.
According to him, “There is a need to pay a substantial amount of the debt in cash. At the minimum, let us pay a substantial amount, then ask for a debt instrument in promissory notes to pay the rest.”
Adelabu acknowledged the government’s role in the sector’s struggles, pledging to not only clear the debt but also implement reforms to ease operational bottlenecks.
He emphasized the need for full liberalization of the power sector, urging Nigerians to embrace cost-reflective tariffs.
“Citizens must pay the appropriate price for the energy consumed. The Federal Government will continue to provide targeted subsidies for economically- disadvantaged Nigerians. We have to understand that our economy cannot sustain subsidies indefinitely,” he asserted, calling for public sensitization campaigns to drive compliance.
He assured the companies of the payment of the outstanding balance within six months through financial instruments such as promissory notes.
“We recognize the urgency of this matter. The government is committed to resolving this debt to stabilize the sector and prevent further crisis,” Adelabu stated, adding that President Bola Tinubu would meet with GenCos leadership to fast-track the process.
The statement disclosed that the GenCoS were led by Chairman of Mainstream Energy Solutions who is also the Chairman of Association of Power Generating Companies; Col. Sani Bello (retired).
Bello warned that liquidity challenges had left GenCos unable to secure loans or maintain infrastructure.
“Without urgent intervention, the entire power ecosystem could collapse,” he stressed.
Chairman of Egbin Power and First Independent Power Limited, Kola Adesina who echoed the urgency added: “This is a national emergency. Everything hinges on power—industries, homes, hospitals. We cannot afford to let the sector fail.”
On her part, the CEO, Association of Power Generating Companies, detailed systemic challenges undermining GenCos, including chronic payment defaults, erratic gas supply, and foreign exchange volatility.
She noted that the Naira’s plunge from ₦157/$1 in 2013 to ₦1,600/$1 had devastated maintenance budgets and loan repayments.
“GenCos have borne unsustainable risks—from grid failures to unproductive taxes—while remaining patriotic,” she said.