Power Firms Deny Reaching Settlement on N4 Trillion Debt with Government

Electricity producers in Nigeria have pushed back against claims by federal officials that a deal has been struck to clear a massive N4 trillion legacy debt weighing on the power industry, insisting that talks remain unresolved despite recent high-level meetings.

The firms, known as generation companies or GenCos, say discussions with the authorities on how to handle the long-standing arrears are still in progress, with no firm agreements locked in. This comes as the government presses ahead with a bond-backed plan to wipe the slate clean, aiming to unlock fresh investments and steady the sector’s shaky finances.

The debt, built up over years of unpaid bills for power supplied and gas used to generate it, totals around N4 trillion owed to both GenCos and their fuel providers. It has crippled their ability to invest in upgrades, leaving machines rundown and supplies patchy, which in turn hampes the nation’s overall electricity flow.

Dr Joy Ogaji, head of the Association of Power Generation Companies, confirmed that bosses from the firms met with top officials last week but stopped short of any breakthrough. “Yes, the chairmen were invited to discuss modalities,” she said. “I know that discussions are still ongoing. Nothing finalised or concretised. I can’t confirm it.”

She warned that the hold-up is biting hard already. Gas suppliers have cut back on deliveries, spare parts are piling up unpaid, and other lenders are turning away from the firms in favour of quicker payers. “Gas suppliers have already started reducing supply,” Ogaji added. “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.”

GenCos point out that they send bills worth about N270 billion each month but receive only N70 billion, leaving a N200 billion shortfall that stacks up fast. The 2025 national budget sets aside N900 billion for the power sector, but without ready cash, it falls well short of what is needed.

The government, however, paints a brighter picture. President Bola Tinubu greenlit the debt reduction scheme in August, with the cabinet giving it the go-ahead. The plan calls for issuing up to N4 trillion in state-backed bonds to cover verified debts—the biggest such move in over a decade.

Olu Verheijen, the president’s special adviser on energy, called it a game-changer. “This framework is a landmark initiative approved by President Tinubu to address structural bottlenecks and lay the groundwork for private sector-led investment and economic growth,” he said. The focus now shifts to overhauling the grid, fixing distribution woes, expanding small-scale power setups, closing gaps in meter rollouts, aligning charges fairly, sharpening supports for the needy, and rebuilding faith in the rules.

Finance Minister Wale Edun echoed this, saying the fixes go deeper than quick cash fixes. “Reforms are beyond liquidity; they rebuild fundamentals so Nigeria’s power sector works for investors, citizens, and the next generation.”

On 7 October, Verheji, Edun, and Power Minister Adebayo Adelabu sat down with GenCos leaders to hash out payment paths. Officials say this led to agreement on one-on-one talks to seal the deals. The effort pulls in the finance and power ministries, the Nigerian Bulk Electricity Trading Company, and other players.

Industry voices have warmed to the idea. The head of Heirs Holdings and Transcorp Power hailed it as a credible push. “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,” he said. “We commend President Tinubu and his economic team for this bold and transformative step.”

Owen Omogiafo, chief of Transcorp Plc, revealed his firm is owed up to N650 billion for power delivered, as noted in April filings. Kolawole Bello, managing director of Sahara Group, added: “This initiative is significant in every respect. It gives us renewed confidence in the reform process and a clear signal that the government is serious about building a sustainable power sector.”

GenCos, though, feel left out of key steps. They were skipped in the debt checks run by the trading company and fired off a letter in September seeking answers. Without clear timelines and full buy-in on the checks, they hold off on signing up.

Talks continue on tailored pacts that balance the government’s purse limits with the firms’ cash crunch. GenCos stay wary, demanding solid dates and open books before any handshake. The government eyes a pivot from firefighting to lasting fixes, drawing private funds to modernise lines, sharpen deliveries, grow local power, plug meter holes, set fair rates, aid the vulnerable, and restore rule trust.