President Bola Tinubu has approved a N3.3 trillion bailout to clear long-standing debts in Nigeria’s power sector, raising hopes for improved electricity supply across the country. The decision comes as the sector continues to face serious financial challenges that have affected power generation, transmission, and distribution for years.
The approval was announced on Sunday in a statement issued by the President’s Special Adviser on Information and Strategy, Bayo Onanuga. According to the statement, the payment plan follows a final review of legacy debts accumulated over a decade, from February 2015 to March 2025.
Onanuga explained that after a detailed verification process, the government and stakeholders agreed on N3.3 trillion as a full and final settlement of the debts. He said the move is aimed at ensuring a fair and transparent resolution of the financial issues that have weighed down the sector for years.
The power sector in Nigeria has struggled with liquidity problems since it was privatised in 2013. The privatisation was expected to improve efficiency and attract private investment, but challenges such as poor revenue collection, electricity theft, inadequate metering, and weak infrastructure have continued to limit progress. As a result, many power generation companies, known as GenCos, have been unable to meet their financial obligations, especially to gas suppliers.
Gas is a key input for electricity generation in Nigeria, as most power plants rely on it to operate. However, unpaid debts to gas suppliers have often led to reduced gas supply, forcing power plants to shut down or operate below capacity. This has contributed to frequent power outages across the country, affecting homes, businesses, and industries.
The Federal Government’s new payment plan is designed to address these issues by clearing the backlog of debts and restoring confidence among investors and operators in the sector. Onanuga revealed that implementation of the plan has already begun, with 15 power generation companies signing settlement agreements worth N2.3 trillion.
He added that the government has so far raised N501 billion to fund the payments, out of which N223 billion has already been disbursed. Further payments are expected to continue in phases as part of the program.
According to the presidency, the immediate impact of the payments will be improved stability in electricity generation. With funds reaching key players in the value chain, power plants are expected to operate more efficiently, leading to more reliable electricity supply.
“This means that power generation will be more stable. With power plants supported, electricity reliability will improve. As the sector stabilises, more investment, more jobs, and better service will follow,” the statement said.
The Special Adviser on Energy to the President, Olu Arowolo-Verheijen, also highlighted the broader goals of the program. She said the initiative is not just about settling old debts but about rebuilding trust across the entire power sector.
“This program is not just about settling legacy debts. It is about restoring confidence across the power sector — ensuring gas suppliers are paid, power plants can keep running, and the system begins to work more reliably,” she said.
Arowolo-Verheijen noted that the debt settlement is part of a wider reform effort by the Tinubu administration. These reforms include improving electricity metering and introducing service-based tariffs, where consumers pay based on the quality and reliability of power they receive.
Electricity metering has been a major issue in Nigeria, with millions of customers still on estimated billing. This has led to disputes between consumers and distribution companies, often referred to as DisCos. The government believes that improving metering will help increase revenue collection and reduce losses in the system.
Service-based tariffs, on the other hand, are designed to ensure that customers who receive better electricity supply pay higher rates, while those with less reliable supply pay less. The policy aims to create a more balanced and fair pricing system while encouraging DisCos to improve service delivery.
The government is also focusing on ensuring that businesses, industries, and small enterprises receive more reliable power. This is seen as critical to economic growth, as many Nigerian businesses rely on expensive diesel generators due to inconsistent electricity supply from the national grid.
By stabilising the power sector, the government hopes to reduce these costs and create a more favourable environment for businesses to thrive. This, in turn, is expected to lead to job creation and improved living standards for Nigerians.
President Tinubu has commended stakeholders who worked to resolve the long-standing issues in the sector. He also confirmed that the next phase of the program, known as Series II, will begin later this quarter.
Nevertheless, many stakeholders see the N3.3 trillion debt settlement as a major turning point. If effectively implemented, it could mark the beginning of a more stable and efficient power sector in Nigeria—one that can meet the energy needs of its growing population and support long-term economic development.
For millions of Nigerians who experience daily power outages, the hope is that this latest intervention will finally bring lasting change to a sector that has struggled for decades.