The ₦3.3 trillion debt settlement approved by Bola Tinubu has exposed deep divisions within Nigeria’s power sector. While several generation companies (GenCos) have welcomed the payment as vital for sustaining operations, others dispute the audited figure, insisting that portions of the legacy debt were excluded. Distribution companies (DisCos) are equally divided, with some questioning why the intervention prioritizes GenCos without addressing structural inefficiencies in the distribution segment. The Transmission Company of Nigeria has remained largely neutral, given its limited exposure to the disputed liabilities. The disagreement underscores persistent concerns over transparency, revenue shortfalls, and uneven risk allocation across the value chain, raising doubts about the long-term impact of the intervention. Oke Peter examines how this widening rift among stakeholders could further deepen the sector’s already fragile and polarized state.
The approval of ₦3.3 trillion by President Bola Tinubu to settle long-standing debts in Nigeria’s power sector has triggered both relief and resistance among industry players, exposing deep cracks in a system already strained by liquidity challenges and mistrust.
The debt, accumulated over roughly a decade, from 2015 to 2024—originated largely from unpaid subsidies, tariff shortfalls, and market inefficiencies tied to the Nigerian Bulk Electricity Trading (NBET) framework. Generation companies (GenCos) had repeatedly complained that they were not fully paid for electricity generated and supplied to the national grid, while distribution companies (DisCos) struggled with collection losses and infrastructure gaps.
Initial claims by some GenCos suggested the debt had ballooned to over ₦4 trillion, a figure that raised eyebrows within government circles. To verify the claims, an independent audit was commissioned, reportedly handled by KPMG. After a forensic review of invoices, remittances, and contractual obligations, the auditors arrived at a reconciled figure closer to ₦3.3 trillion, significantly lower than what had been touted in some quarters.
Concerns about inflated claims, duplicated invoices, and lack of transparency in the market settlement system led to delays in approval by the president. Sources indicate that the presidency demanded multiple validation layers before committing public funds. However, mounting pressure from industry stakeholders, coupled with fears of imminent grid collapse due to GenCos’ inability to sustain operations, eventually pushed the president to approve the payment.
The reaction within the generation segment has not been uniform. Eight GenCos—largely those with stronger exposure to NBET contracts and heavier debt burdens—welcomed the intervention, describing it as a lifeline. Among them were firms such as Transcorp Power, Egbin Power, Geregu Power, TransAfam Power, First Independent Power Limited, Niger Delta Power Holding Company, Ibom Power Company and Mabon Limited, which have publicly emphasized the urgency of liquidity support to maintain operations and service obligations.
However, other GenCos expressed reservations and their concerns center on the methodology used in computing the final figure, alleging that not all legacy debts and foreign exchange differentials were adequately captured. Some also fear that the selective validation process could create disparities in how payments are allocated, potentially disadvantaging certain operators.
Distribution companies have been even more divided, while a few DisCos quietly support the move, hoping it will stabilize upstream supply, others argue that settling GenCos’ debts without addressing structural inefficiencies in distribution—such as metering gaps and energy theft—offers only temporary relief. Companies like Ikeja Electric have previously stressed that liquidity must be addressed across the entire value chain, not just generation.
The division among major players has significant implications as it highlights a lack of unified strategy in tackling the sector’s challenges and risks undermining confidence in reform efforts. Investors may remain cautious, wary of policy inconsistencies and disputes over financial settlements. More critically, the disagreement signals that the ₦3.3 trillion payment, while substantial, does not resolve the underlying structural issues—tariff inadequacy, weak enforcement, and governance lapses.
In his opinion, Comrade Jide Odueyingbo, former Secretary General of the Senior Staff Association of Electricity and Allied Companies (SSAEAC) condemned what he described as “pranks” by both GenCos and DisCos. He argued that the persistent public disputes over figures and entitlements undermine public trust and distract from the real task of fixing the sector. According to him, “Nigerians are less concerned about who is owed what and more about whether power supply will improve.”
Another stakeholder, energy policy analyst Ifeoma Nwankwo, urged all parties to prioritize stability over confrontation. She advised GenCos and DisCos to “allow peace to reign in the interest of Nigerians,” emphasizing that collaborative reform, rather than adversarial posturing, is essential for long-term progress.
Ultimately, while the ₦3.3 trillion intervention may ease immediate financial pressures and prevent operational shutdowns, it is unlikely to serve as a permanent solution to Nigeria’s power crisis. Without comprehensive reforms, cost-reflective tariffs, improved metering, stronger regulatory oversight, and investment in infrastructure—the cycle of debt and bailout may persist.
For now, the payment stands as both a necessary intervention and a stark reminder: fixing Nigeria’s power sector requires more than money—it demands trust, transparency, and collective responsibility.
