President Bola Ahmed Tinubu has sanctioned a financial reform program to clear an outstanding debt of N3.3 trillion within the nation's power sector. This was disclosed on Sunday, April 5th, 2026, by Bayo Onanuga, the Special Adviser on Information.
The accumulated debts span from February 2015 to March 2025, and following a verification process, N3.3 trillion has been designated as the final settlement amount.
Olu Arowolo-Verheijen, the President's Special Adviser on Energy, added that the initiative extends beyond addressing past debts to rejuvenating investor confidence in the power industry.
The announcement comes as a significant development for a sector that has faced prolonged periods of darkness and operational paralysis. Many businesses had been forced to scale down or halt operations due to the persistent power outages, which intensified with the onset of the rainy season.
The Minister of Power, Adebayo Adelabu, had been under scrutiny for the sector's performance, with public perception highlighting his challenges in managing the crisis, a situation illustrated by a widely circulated image of him using a power bank to charge his phone during an address.
However, available data suggests that the N3.3 trillion figure may not fully resolve the sector's financial woes. As of early 2026, the debt owed to Generating Companies (GenCos) by the Nigerian Bulk Electricity Trading Company (NBET) had reached an estimated N6.8 trillion.
Furthermore, industry stakeholders dispute the government's claim that N3.3 trillion represents a full and final settlement after verification. The last reconciliation exercise involving government officials and power sector participants had established the debt at approximately N4 trillion.
Joy Ogaji, the Chief Executive Officer of the Association of Power Generation Companies (APGC), stated that her association is unaware of any verification process outside the reconciliation concluded in March 2025, thereby discrediting the N3.3 trillion figure.
Details regarding the disbursement of the N3.3 trillion to GenCos, including timelines, have not yet been provided by the government.
While the government had previously issued N501 billion in bonds to GenCos, this amount is considered insufficient given the substantial debts owed to gas suppliers. Moreover, stringent conditions attached to these disbursements have reportedly failed to encourage gas suppliers to increase their supply to thermal power plants.
The N3.3 trillion payment is viewed as a partial solution, failing to comprehensively address the underlying issues across power generation, transmission, and distribution. It also does not tackle concerns surrounding the privatization process that led to the sector's fragmentation.
Critics point to the privatization exercise, which, like similar past initiatives, was allegedly marred by patronage over technical capacity and operational competence, leading to the current challenges.
GenCos have been struggling with liquidity and operational maintenance difficulties due to the significant debts owed to them. Similarly, transmission companies face limitations in distributing the limited power generated, contributing to frequent grid collapses.
As of 2020, electricity distribution companies (DisCos) were indebted to the federal government by N2.6 trillion in unpaid remittances to NBET. DisCos have also faced foreign exchange challenges and operational inefficiencies. Despite a collection efficiency of 76.34% in January 2026, they experienced a revenue shortfall of N63.46 billion.
Many DisCos are currently under receivership by the Asset Management Corporation of Nigeria (AMCON) or various banks due to insolvency and debt issues. Key DisCos reportedly under receivership include those in Ibadan, Kano, Kaduna, and Port Harcourt, with some facing legislative scrutiny over their financial standing.
To effectively reform the power sector, a comprehensive and integrated approach is essential, ensuring that generation, transmission, and distribution operate harmoniously. The government must engage in genuine dialogue with stakeholders in the generation sector to agree on debt figures and repayment strategies, rather than imposing figures unilaterally.
Furthermore, substantial investment is required in alternative energy sources like solar power, which is clean and abundant. These could power homes and businesses, freeing up thermal and hydro power for industrial use, the organized private sector, healthcare facilities, and educational institutions.
While the N3.3 trillion settlement is a welcome step, it is considered a short-term measure that does not fully address the multifaceted challenges plaguing the power sector. Its calibration may be aimed at saving face, particularly for a president who pledged to fix electricity provision.
A complete overhaul is necessary to resolve the systemic issues affecting all aspects of the power sector. The journey to a stable and efficient power supply in Nigeria is far from over.
Nick Dazang is a former director at the Independent National Electoral Commission (INEC).
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