Power generation companies in Nigeria have said the Federal Government is yet to begin payment of the N3.3 trillion electricity sector debt approved by President Bola Tinubu, despite earlier assurances that the settlement process had commenced.
The companies, operating under the Association of Power Generation Companies (APGC), also rejected the government’s reduction of the debt from about N4 trillion to N3.3 trillion, insisting that the actual amount owed remains higher than the figure recognized by the authorities.
The dispute over the debt came to the fore on Monday during a webinar organized by the APGC, where the association’s Chief Executive Officer, Joy Ogaji, accused the government of failing to release any funds to most generation companies under the approved settlement arrangement.
According to Ogaji, generation companies have not received any payment despite repeated announcements by government officials that efforts were underway to clear the long-standing debt burden threatening the country’s electricity sector.
“You know that this acceptance of the government is like a moving target. Earlier, the government said the debt was N2.3 trillion. About a month or two after, it increased to N2.8 trillion. The last one was N3.3 trillion before they appointed a new special adviser on power. From that N3.3 trillion or N2.8 trillion, to date, we have not received a dime,” she said.
The latest development highlights the deep financial challenges facing Nigeria’s power sector, where generation companies have repeatedly complained about mounting debts, inadequate revenue and difficulties in paying gas suppliers.
The electricity value chain in Nigeria involves power generation companies, gas suppliers, transmission operators and distribution companies. Over the years, poor revenue collection and tariff shortfalls have created huge financial gaps, leaving many operators struggling to meet their obligations.
In April this year, presidential spokesman Bayo Onanuga announced that President Tinubu had approved a framework for settling legacy debts in the electricity sector under the Presidential Power Sector Financial Reforms Program.
According to the government, a verification exercise established N3.3 trillion as the final amount owed to generation companies for electricity supplied between February 2015 and March 2025.
The government also disclosed that implementation of the settlement plan had begun, with 15 power plants reportedly signing agreements covering about N2.3 trillion. It further announced that N501 billion had been raised through a bond program to support the payment process.
However, the APGC has challenged those claims, insisting that no payment has reached most generation companies.
Ogaji said even the N500 billion bond raised by the government had not been fully disbursed.
“The N500 billion bond that they said they raised by December and January this year, as I speak to you, they have not even finished disbursing,” she stated.
She further alleged that the payment process was moving slowly despite the urgency of the situation facing electricity producers.
A major point of disagreement between the government and the generation companies is the actual size of the debt. While the Federal Government maintains that N3.3 trillion is the verified figure, the GenCos insist that their obligations, particularly to gas suppliers, put the debt above N4 trillion.
According to Ogaji, generation companies cannot accept a reduced figure because a large portion of the money owed is meant for gas suppliers who provide fuel for thermal power plants.
She explained that discussions were held with gas suppliers regarding the government’s proposal to reduce the debt burden, but the suppliers rejected the idea.
According to her, the gas companies made it clear that they expected full payment and would not agree to any reduction in the amounts owed to them.
The APGC chief noted that while the government proposed a settlement involving a significant reduction in the debt, most generation companies rejected the offer.
She said only five companies agreed to participate in the bond arrangement proposed by the Federal Government.
The companies are Geregu Power Plc, Ibom Power Company Limited, First Independent Power Limited, Niger Delta Power Holding Company Limited and Mabon Energy.
According to Ogaji, these firms accepted the terms attached to the bond programme and are therefore receiving payments under that arrangement.
She maintained that other generation companies refused to sign because the settlement terms required them to accept substantial cuts in the debt owed to them.
The APGC also warned that the sector’s debt burden has continued to grow due to delayed payments and accumulating obligations.
Ogaji said the liabilities, which were previously estimated at N6.8 trillion, have now risen above N7 trillion and are still increasing.
Without sufficient cash flow, experts say electricity generation could be affected, leading to further pressure on an already fragile power sector.
The Federal Government has acknowledged the challenges and in January announced the Presidential Power Sector Debt Reduction Program as part of efforts to tackle the crisis.
At the time, the Special Adviser to the President on Energy, Olu Verheijen, disclosed that five generation companies operating 14 power plants had signed settlement agreements with the Nigerian Bulk Electricity Trading Plc following the issuance of a N501 billion bond.
According to Verheijen, the five companies agreed to a negotiated settlement valued at N827.16 billion, which would be paid in four instalments.
Despite these efforts, the disagreement between the government and the majority of generation companies suggests that the debt issue remains far from resolved.