The Presidency has provided clarification over the controversial N3.3 trillion debt settlement plan approved by President Bola Tinubu for power generation companies, insisting the figure followed a rigorous verification process.
The plan, which targets the settlement of legacy debts owed to electricity generation firms between 2015 and 2025, is part of a broader reform initiative aimed at stabilising Nigeria’s power sector and improving electricity supply nationwide.
Under the programme, implemented through the Presidential Power Sector Financial Reforms Programme, the presidency said early steps have already been taken, with about N223 billion disbursed to generation companies and gas suppliers, while additional payments are being processed.
In a statement issued by presidential spokesman Bayo Onanuga, the government said the repayment process had commenced, noting that several power plants have already entered into settlement agreements running into trillions of naira.
However, the announcement initially sparked concern among operators in the sector, particularly members of the Association of Generation Companies of Nigeria, who questioned the basis for the N3.3 trillion figure.
Industry stakeholders argued that the amount did not align with figures previously agreed during reconciliation meetings, raising doubts about the methodology used in arriving at the final sum.
Responding to these concerns, the Presidency stressed that the exercise was not designed to reward unverified claims but to address longstanding financial imbalances in the electricity market.
“The Federal Government of Nigeria is implementing a structured and balanced reform programme to address longstanding financial challenges in the power sector,” the statement said.
“At the core of this effort is a market-based settlement mechanism designed to restore the sector, not reward accumulated claims that extend beyond verifiable service delivery.”
According to the government, total claims across the electricity value chain had risen to about N4.7 trillion over the ten-year period under review.
Following a high-level stakeholder engagement in July 2025, a detailed audit and verification process was ordered to determine legitimate obligations.
That exercise, officials said, led to a reduction of roughly 30 per cent in the claims, bringing the final agreed settlement figure to N3.3 trillion, representing only validated and contract-backed debts.
To avoid excessive fiscal pressure, the government explained that the settlement would be executed in phases through a market-driven financing framework rather than as a one-off payment.
As part of the rollout, an initial programme size of about N1.23 trillion has been outlined, with funding already sourced from the domestic capital market.
The presidency confirmed that disbursement under the first phase began earlier in the year.
Progress has also been recorded in securing participation from operators.
As of early January 2026, a handful of generation companies covering multiple power plants had signed agreements valued at hundreds of billions of naira.
By the end of March, more firms had joined, with total signed deals rising significantly.
“This reflects growing alignment and participation across the sector,” the Presidency noted, adding that the initiative is being implemented alongside wider reforms, including tariff adjustments and targeted support for vulnerable consumers.
The government said the overall objective is to restore liquidity, stabilise electricity generation, and improve reliability across the grid, while repositioning the sector for long-term sustainability.
It further emphasised that the intervention represents a shift toward transparency and discipline, moving away from disputed claims to verifiable and structured financial obligations.
Despite these assurances, concerns persist within the industry. The Chief Executive Officer of the generation companies’ association, Joy Ogaji, has expressed reservations about the parameters used in determining the debt, noting that some stakeholders were not adequately carried along in the process.
The clarification comes amid broader efforts by the Federal Government to reform the electricity sector and address longstanding liquidity challenges that have hindered stable power supply in the country.
