Wale Edun
By Abayomi Grace
The Federal Government of Nigeria has initiated plans to settle the N4 trillion debt owed to Power Generation Companies (GenCos) through a refinancing arrangement, potentially involving bond issuance or loan restructuring. The debt breakdown includes N2 trillion for 2024 and N1.9 trillion in legacy debts. Implementation has begun, led by the Debt Management Office and other experts, with the first phase expected to be completed within three to four weeks.
The government aims to stabilize the power sector, prevent further crises, and ensure long-term viability for investors by clearing the debt. Minister of Power, Adebayo Adelabu, assured GenCos executives that the government would prioritize immediate payment of a significant portion of the debt, while the balance would be addressed through other debt instruments. Specifically, the government plans to settle up to N2 trillion of the debt before the end of 2025, using a combination of direct cash disbursements and promissory notes.
This move is expected to provide relief to the power firms and help avert operational shutdowns. However, industry watchers fear that the planned transition to a fully cost-reflective tariff regime may impose more financial burden on electricity consumers. The government has also sought a $125 million loan from the Islamic Development Bank to fund road infrastructure projects in Abia State .
