President Bola Tinubu’s recent approval of a ₦3.3 trillion debt settlement plan has been touted as a significant move towards fixing the liquidity crunch that has choked the Nigerian power sector for years. However, the announcement has generated mixed reactions regarding its significance in the efforts towards ending the persistent blackouts that Nigerians have grappled with over the years.
In what seemed like Easter good news to Nigerians about the government’s efforts towards tackling some of the challenges in the power sector, a statement by presidential spokesman, Bayo Onanuga, said the ₦3.3 trillion was approved for the settlement of legacy debts that accumulated over a decade (February 2015 to March 2025). The Presidency affirmed that the ₦3.3 trillion has been agreed as “a full and final settlement” of the debts after a comprehensive review of all claims.
It emphasised that the debt clearance would help to resolve liquidity challenges across the power sector value chain. For the Generation Companies (GenCos), it would help with the needed funds for turbine maintenance and operational costs and also boost gas supply. “With payments reaching the power value chain, generation will be more stable. With power plants supported, electricity reliability will improve,” Onanuga stated.
The statement also disclosed that the implementation has begun with 15 power plants signing settlement agreements totalling ₦2.3 trillion. It also said the government has raised ₦501 billion via power sector bonds, with ₦223 billion already disbursed.
Controversy over the announcement
The announcement of the approval has sparked fresh controversies in different quarters. This stems from the fact that the Federal Government had made a similar announcement two years ago when the Minister of Power, Adebayo Adelabu, said that President Bola Tinubu had approved the gradual payment of power sector debts estimated at over ₦3.3 trillion.
Adelabu had in 2024 said the Federal Government would pay about ₦1.3 trillion owed to power generation companies through cash injections and promissory notes, while about $1.3 billion owed to gas companies would be paid in cash and future royalties.
He assured them that the Federal Government had already commenced payment of the cash part of the ₦1.3 trillion debt.
However, two years later, the Presidency made a similar announcement, triggering reactions about what happened with the implementation of the approval announced by the Minister in 2024.
Arise Television anchor, Rufai Oseni, in a post on X, described the ₦3.3 trillion debt settlement announcement as mere “propaganda,” pointing to the earlier statement by the Minister of Power. He called on Onanuga to explain why the President announced approval of ₦3.3 trillion for Gencos in 2024, approved ₦4 trillion GenCo bonds in 2025, and approved ₦3.3 trillion for the same GenCos in 2026. Reacting, Onanuga said while the figures in the headlines for the 2024 and 2026 announcements may be the same, they capture two different contexts.
Some other X users who reacted to the post accused the Federal Government of engaging in propaganda to deceive the public about the debt settlement.
Meanwhile, the Association of Power Generation Companies of Nigeria (APGC) has questioned the approved ₦3.3 trillion. APGC Chief Executive Officer, Joy Ogaji, faulted the Federal Government’s pronouncement, saying the GenCos were not carried along in any review that was purportedly done and did not know how the Federal Government arrived at ₦3.3 trillion.
Pinnacle Daily reports that Ogaji had earlier said the debt owed to GenCos reached up to ₦6 trillion as of February 2026. In previous media interviews and press statements, the APGC CEO said the debt had grown to N4 trillion from 2015 to 2024, adding that in 2025, there was a shortfall of ₦200 billion each month, which is about N2.4 trillion for the 12 months of the year. When added altogether with the first two months of 2026, she said the debt has reached about ₦6.8 trillion as of February and could hit ₦7 trillion when the N200 billion shortfall is added for that of March.
Ogaji, who revealed that about ₦3.3 trillion of the outstanding debt is owed to gas suppliers, said she does not know if the latest approval of ₦3.3 trillion was for gas companies only.
Restoring Liquidity: Why the Debt Settlement Matters
Those who hailed the announcement of the approval of funds for settling the outstanding debts argued that by paying gas suppliers, the government ensures that gas-fired plants (which provide the bulk of Nigeria’s grid power) don’t shut down due to unpaid invoices.
They also claimed that with the settlement of the debt, GenCos can now afford the specialized maintenance required to keep their plants running at higher capacities.
Speaking on the approval, Special Adviser on Energy to President Tinubu, Olu Arowolo-Verheijen, said it will restore confidence in the sector, ensure gas suppliers are paid, and allow power to operate more reliably, thereby attracting more investments and creating more jobs.
Senior Advocate of Nigeria and Professor of Law at the University of Lagos, Yemi Oke, aligned with the Federal Government on the ₦3.3 trillion payout, saying he had earlier disputed the figure quoted by GenCos and called for a forensic audit to determine the exact amount that should be paid.
Oke, who is a member of the committee formed to spearhead the incorporation of Grid Asset Management Company Limited (GAMCO), also noted that clearing the debt overhang would help to boost liquidity across the power sector value chain and restore investor confidence.
Why Blackouts may Persist
While the debt clearance is considered a huge win, experts believe that funds released to settle old debts alone do not fix a fragile grid, asserting that several non-financial issues still loom.
This development comes amid recurring power outages in recent months triggered by a sharp decline in power generation largely due to gas supply shortages that have constrained output from thermal plants. The Minister of Power, Adebayo Adelabu, who recently apologized for the development, attributed it to factors beyond his control.
Rumundaka Wonodi, pioneer managing director and CEO of Nigerian Bulk Electricity Trading Plc, said that while the move would clear debts that have caused liquidity challenges across the power sector value chain, it is not the magic bullet to solving all the problems in the sector in the long term. “It goes a long way to help the sector, but it does not solve all the problems,” Wonodi, who is the founder and CEO of ZKJ Energy Partners, stated in an interview on Arise News TV.
A former chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr Sam Amadi, said Nigerians should take the announcement with caution, stressing that it only resolves disputes between power generators and the government over legacy debts and not the crisis of electricity supply.
Amadi, who spoke in an interview with News Central TV, said the real change in the power sector would come with investment in the upgrade of transmission and distribution infrastructure to increase power offtake and distribution to electricity consumers.
“The ultimate quality improvement comes with both distribution and transmission being able to take, hopefully, additional load coming with more gas supply to GenCos and turning them into electricity supply to homes and families,” Amadi stated.
“So, we are somewhere closing the deal, but we are not yet there in terms of real change and real improvement in the sector.”
Addressing the Grid and Metering Gap
Some of the issues in the sector include the fragile national grid, infrastructure and metering gaps. With an installed generation capacity of over 13,000 megawatts (MW), even if the power plants generate up to 10,000MW, the transmission grid has historically struggled to wheel more than 5,000MW without collapsing. We already recorded the first total grid collapse of 2026 in January.
On the infrastructure gap, many transformers and lines managed by the distribution companies (DisCo) are aged and cannot handle increased load, leading to localized load shedding even when total generation is high.
Over five million Nigerians are still on estimated billing, according to reports by the Nigerian Electricity Regulatory Commission. Without widespread metering, DisCos struggle to collect the revenue needed to prevent new debts from piling up.
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Analysts observed that while the ₦3.3 trillion clearance is the necessary foundation, achieving a more stable generation in the coming months and years requires a physical overhaul. This, according to them, requires a concerted effort to build more independent power structures and modernise the national grid.
The Call for Structural Reforms
Oke stressed that deeper reforms are needed to ensure a functional power sector in the country.
The energy law expert called for what he described as “another round of re-acquisition and refinancing of the power sector.”
He explained that this would require refinancing the generation, transmission, and distribution companies by bringing in new players or investors to inject fresh funds, either through full or partial concessions, mergers, or acquisitions.
“So, we need to resell and repurchase,” Oke stated.
According to him, the 2013 privatisation was flawed and could not achieve the desired result more than a decade after it was done.
Making reference to the banking sector recapitalisation and its impact on strengthening the financial system in the country, Oke said: “The Nigerian power sector needs to be repackaged through something similar to consolidation. We need to get a new set of players, a new set of funds to get involved and take it to the next level.
He emphasised that the power sector needs to be urgently rejigged by refinancing because the country is constrained financially and the government cannot continue to fund the sector through subsidy payments.
He said the government seems to be spending more on the power sector even after it has been privatized and Nigerians are not seeing the result.
“We need strategic investments that would take the power sector out of the woods,” Oke added.
Victor Ezeja is a passionate journalist, scholar and analyst of socioeconomic issues in Nigeria and Africa. He is skilled in energy reporting, business and economy, and holds a master's degree in Mass Communication. He can be reached via @VICTOREZEJA on X
