Power Generation Companies Dispute Federal Government’s Claim of Finalised N4tn Debt Framework

Power generation companies in Nigeria have said that discussions with the Federal Government over the settlement of the N4tn legacy debt are still ongoing, countering recent claims by officials that an implementation framework had already been finalized. The disagreement has once again underscored the long-running liquidity crisis plaguing Nigeria’s electricity market and the growing tension between the government and private power operators over transparency and inclusiveness in sector reforms. Speaking with The PUNCH, the Chief Executive Officer of the Association of Power Generation Companies (APGC), Dr. Joy Ogaji, confirmed that operators had met with top government officials to deliberate on modalities for the settlement of outstanding debts. However, she maintained that no definitive agreement had been reached regarding the payment structure or timeline. “Yes, meetings were held with key stakeholders, but there is no concrete framework yet. Discussions are still ongoing,” she stated, emphasizing that the government’s recent announcements were premature.

Her comments came just days after the Special Adviser to President Bola Tinubu on Energy, Olu Verheijen, issued a statement announcing what she described as the completion of the implementation framework for the Presidential Power Sector Debt Reduction Plan. According to Verheijen, the initiative—approved by President Tinubu and endorsed by the Federal Executive Council in August 2025—authorizes the issuance of up to N4tn in government-backed bonds to clear verified arrears owed to generation companies and gas suppliers. She said the plan marked a major step toward restoring investor confidence and financial stability in the electricity industry. Similarly, the Minister of Power, Adebayo Adelabu, had earlier announced that the government had approved the bond issuance as part of its strategy to defray the longstanding legacy debt.

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However, the GenCos expressed concern that they were not properly consulted or carried along during the verification and planning process. In September, Ogaji reportedly wrote to the Nigerian Bulk Electricity Trading Plc (NBET) seeking clarity on the government’s announcement, questioning why the operators were excluded from key verification exercises. “The GenCos were not involved in the design or review process. We only heard about the so-called framework in the media. We are stakeholders in the value chain and should not be left out,” Ogaji complained.

According to Verheijen’s statement, on October 7, she met with the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, and Minister of Power, Adebayo Adelabu, alongside senior executives of the GenCos, to review settlement modalities for the outstanding debt. She said the meeting ended with a consensus on conducting bilateral negotiations to finalise the terms of settlement, balancing fiscal realities with the financial needs of the generation companies. But GenCos have since clarified that while they appreciated the dialogue, no binding decisions were made, and discussions are expected to continue in the coming weeks.

The government’s debt reduction initiative has been hailed by several industry stakeholders as the most ambitious intervention in over a decade, addressing a legacy debt overhang that has severely constrained investments, weakened the balance sheets of utility companies, and hindered consistent electricity supply. Industry leaders, including the Chairman of Heirs Holdings and Transcorp Power, were quoted commending the Tinubu administration’s renewed focus on resolving the sector’s liquidity challenges. “For the first time in years, we are seeing a credible and systematic effort by the government to tackle the root liquidity challenges in the power sector. We commend President Tinubu and his economic team for this bold and transformative step,” he reportedly said.

Similarly, Owen Omogiafo, Group Chief Executive Officer of Transcorp Plc, disclosed earlier this year that the Federal Government owed the company around N650bn for power generated and supplied to the national grid. She described the new debt-reduction plan as a “critical step toward restoring confidence in the electricity market.” The Group Managing Director of Sahara Group also echoed this sentiment, saying, “This initiative gives us renewed confidence in the reform process and a clear signal that the government is serious about building a sustainable power sector.”

Verheijen, in her statement, further explained that the government’s long-term goal was not just debt repayment but the creation of a stable investment climate for the power sector. “We are modernising the grid, scaling embedded generation, closing metering gaps, and aligning tariffs with efficient costs while protecting the poor through better-targeted subsidies,” she said. “This marks a shift from crisis management to sustainable service delivery, restoring regulatory trust and investor confidence.” Minister Edun added that the reforms were designed to rebuild the fundamentals of Nigeria’s power sector so that it could “work for investors, for citizens, and for the next generation.”

Despite these assurances, the GenCos remain skeptical. They insist that implementation details—including verification mechanisms, bond issuance procedures, and payment timelines—are still unclear. Ogaji revealed that power producers were grappling with severe financial strain due to persistent shortfalls in monthly remittances. According to her, GenCos issue average monthly invoices of N270bn, but only about N70bn is paid, leaving an outstanding balance of N200bn each month. She warned that the industry was nearing a breaking point. “Gas suppliers have already started reducing supply. There are critical maintenance works on our machines, spares to purchase, and other creditors who are no longer willing to wait for payments. They now prioritise those who pay them promptly,” she said.

The APGC chief further criticised the 2025 federal budget, which earmarked N900bn for the power sector, describing it as inadequate and poorly structured. She argued that the allocation lacked cash backing and could not realistically address the depth of financial distress facing operators. “Without credible financing, the proposed intervention risks becoming another unfulfilled promise,” she warned.

Industry analysts say the ongoing disagreement underscores the need for stronger collaboration between the government and key stakeholders in the power sector. While the Tinubu administration’s bond initiative has been praised for its ambition, experts warn that without transparency and inclusiveness, it could face implementation setbacks similar to previous reforms. For now, Nigeria’s power generation companies remain cautious—optimistic that a solution is near, yet uncertain of when or how the long-awaited debt relief will finally materialise.