Tinubu Approves N3.3 Trillion Payment Plan to Resolve Legacy Debts in Power Sector

President Bola Ahmed Tinubu has approved a N3.3 trillion payment plan to settle long-standing legacy debts in Nigeria’s power sector, a move aimed at stabilising electricity generation and improving supply across the country.

The decision is expected to address liquidity challenges that have contributed to recent sharp declines in power output and widespread load shedding.

According to a statement issued on Sunday by the President’s Special Adviser on Information and Strategy, Mr Bayo Onanuga, the N3.3 trillion figure represents a full and final settlement of legacy obligations accumulated between February 2015 and March 2025.

The government described the resolution as fair and transparent following a comprehensive review of the debts. Implementation of the plan has already commenced, with 15 power plants signing settlement agreements amounting to N2.3 trillion.

The Federal Government had earlier raised N501 billion to fund the payments, of which N223 billion has so far been disbursed, with additional tranches scheduled for release.

The next phase of payments, known as Series II, is expected to begin in the current quarter. The debt settlement forms part of the Presidential Power Sector Financial Reforms Programme.

President Tinubu commended stakeholders who contributed to resolving the legacy issues and expressed confidence that the intervention would boost generation capacity and restore reliability in electricity supply.

Special Adviser on Energy to the President, Olu Arowolo-Verheijen, highlighted the broader impact of the payment. She noted that settling the debts would improve liquidity across the power value chain, enabling gas suppliers to resume deliveries and allowing power plants to operate more consistently. This, in turn, is expected to support economic productivity, attract investment and create jobs.

Arowolo-Verheijen explained that the programme goes beyond debt clearance. It is linked to ongoing reforms such as improved metering and service-based tariffs that tie payments to the quality of electricity received. The government is also prioritising power supply to businesses, industries and small enterprises, recognising reliable electricity as essential for job creation and economic growth.

National power generation had fallen to an average of about 4,300 megawatts between February and March 2026, well below the country’s installed capacity of over 13,000 megawatts and estimated demand exceeding 20,000 megawatts.

The decline was largely attributed to inadequate gas supply to thermal plants, with daily deliveries dropping to between 650 and 700 million standard cubic feet, less than half the required volume. This forced several plants to shut down or run below capacity, compelling the Nigerian Independent System Operator to enforce nationwide load shedding to avoid a total grid collapse.

Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, described the N3.3 trillion resolution as a bold step, particularly given the government’s funding constraints. He said clearing the debts would improve liquidity, encourage gas supply and lead to more stable electricity generation. Yusuf urged stakeholders to embrace the settlement and focus on sustained reforms rather than disputing the exact figure.

However, the Association of Power Generation Companies expressed reservations about the agreed amount. Its Chief Executive Officer, Dr Joy Ogaji, stated that a joint reconciliation by Generation Companies, the Ministry of Finance, the association and the Nigerian Bulk Electricity Trading Company had pegged the debt at N4 trillion as of December 2024.

She noted that only five Generation Companies had signed settlement agreements so far, contrary to the government’s claim of 15. Ogaji recalled that President Tinubu had earlier approved N4 trillion in a combination of cash and bonds during a July meeting at the State House, directing the Minister of Finance and the Debt Management Office to finalise arrangements with the Generation Companies. She called for clarity on how the final N3.3 trillion figure was determined.

The legacy debts had accumulated over more than a decade, contributing to liquidity problems that discouraged gas suppliers and affected plant operations. Stakeholders hope the payment will restore confidence in the sector and encourage greater investment in generation, transmission and distribution infrastructure.

The power sector has long been a major constraint on Nigeria’s economic development. Frequent outages and reliance on expensive alternative sources such as diesel generators have increased production costs for businesses and reduced quality of life for households.

Resolving the legacy debt issue is seen as a critical step toward addressing these challenges. Industry analysts expect the intervention to ease immediate pressures on thermal plants and improve overall grid stability in the short term. However, they emphasise that long-term solutions will require sustained investment in gas infrastructure, transmission upgrades and expansion of renewable energy sources to meet growing demand. The government has indicated that the debt settlement is part of a wider reform agenda that includes better metering systems and a shift toward performance-based tariffs.

These measures are intended to link consumer payments more directly to the quality and reliability of service received. As payments continue and more power plants formalise agreements, attention will turn to the actual impact on daily electricity supply. Consumers, particularly in areas that have experienced prolonged outages, will be watching to see whether the resolution translates into noticeable improvements in power availability.