By Our Reporter
President Bola Tinubu has approved the payment of N2.8tn to power generation companies (GenCos) as the Federal Government’s verified debt on long-standing electricity subsidies dating back to 2010, firmly rejecting the N6tn claim initially submitted by the operators.
Senior Presidency and power ministry officials disclosed that the President declined to approve any payment beyond the amount confirmed through an extensive audit, insisting that public funds would only be disbursed based on verified figures.
The approval followed months of negotiations and a tripartite audit involving the Ministry of Finance, the Nigerian Bulk Electricity Trading Plc, and the GenCos. It also came shortly after the Nigeria Labour Congress accused the generation companies of attempting to siphon public funds.
President Bola Tinubu
According to sources familiar with the discussions, GenCos had initially presented a claim of N4tn during an August meeting with the President, later revising it upward to N6tn. However, Tinubu reportedly likened the submissions to the inflated claims that plagued the former fuel subsidy regime and ordered a comprehensive audit before committing government resources.
While the audit was ongoing, the Federal Government raised N501bn in January through a bond issued under the Presidential Power Sector Debt Reduction Programme. The bond, which was fully subscribed by pension funds, banks, and asset managers, was disbursed as a show of good faith pending final reconciliation of the debt.
Following the audit’s conclusion, the verified liability was pegged at N2.8tn—less than half of the N6.6tn recently cited by the Chief Executive Officer of the Association of Power Generation Companies, Dr Joy Ogaji, who had warned that the debt was increasing by about N200bn monthly.
The power sector’s liquidity crisis traces back to the 2013 privatisation of electricity assets, when generation and distribution companies were sold for approximately N400bn. Persistent tariff shortfalls, foreign exchange pressures, and market liquidity challenges have since led to mounting unpaid invoices across the value chain.
Five GenCos—First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and Niger Delta Power Holding Company Limited—have signed settlement agreements with NBET worth a combined N827.16bn, to be paid in four instalments.
However, Tinubu has attached strict conditions to the N2.8tn approval. A significant portion of the funds will be ring-fenced to settle outstanding debts owed by GenCos to gas suppliers, a move aimed at addressing gas shortages that frequently trigger national grid collapses. The President also directed that part of the payment be earmarked for infrastructure upgrades, with proof of reinvestment required.
Officials said between May and July, the government plans to release an additional N600bn to N800bn, bringing total payments to roughly half of the approved liability by mid-year. The outstanding balance will be cleared over the next 12 to 24 months.
Presidency sources further revealed that the audit uncovered concerns about underinvestment by power operators, alleging that some companies have prioritised revenue collection over reinvesting in infrastructure. The government now intends to tie future disbursements to measurable improvements in service delivery and network upgrades.
With the N2.8tn figure now approved, the Federal Government maintains it will not pay “one naira more” than the audited amount, signaling a tougher stance on subsidy-related claims in the power sector.
