The Federal Government has pledged urgent action to resolve the alarming N4 trillion debt owed to power generation companies (GenCos), a move aimed at preventing a catastrophic breakdown of Nigeria’s power infrastructure. The announcement came after critical discussions between the Minister of Power, Adebayo Adelabu, and top executives of the GenCos, which took place in Abuja last Tuesday.
According to a statement issued on Sunday by Bolaji Tunji, Special Adviser for Strategic Communications and Media Relations to Minister Adelabu, the government is committed to stabilizing the energy sector, starting with immediate financial relief for GenCos.
FG Promises Substantial Cash Payment and Structured Debt Repayment
Adelabu assured GenCo leadership that the Federal Government would prioritize payment of a significant portion of the multi-trillion-naira debt, with the balance to be resolved through financial instruments such as promissory notes. This strategy, he explained, will be presented in an upcoming meeting between President Bola Tinubu and GenCo representatives.
“There is need to pay a substantial amount of the debt in cash. At the minimum, let us pay a substantial amount, then ask for a debt instrument in promissory notes to pay the rest,” Adelabu stated. He committed to settling the outstanding balance within six months using structured debt instruments.
Highlighting the urgency of the situation, he added, “The government is committed to resolving this debt to stabilise the sector and prevent further crisis. We recognise the urgency of this matter.”
Power Sector Faces Imminent Collapse Without Intervention
The warning signs about the precarious state of Nigeria’s power sector were brought into sharp focus during the Abuja meeting. Leading the delegation of GenCos was Col. Sani Bello (rtd.), Chairman of Mainstream Energy Solutions and head of the Association of Power Generating Companies (APGC). Bello warned that liquidity shortages had crippled GenCos’ ability to borrow or maintain infrastructure, painting a grim picture of the sector’s viability.
“Without urgent intervention, the entire power ecosystem could collapse,” Bello cautioned.
Echoing this concern, Kola Adesina, Chairman of Egbin Power and First Independent Power Limited, described the situation as a national emergency. “This is a national emergency. Everything hinges on power—industries, homes, hospitals. We cannot afford to let the sector fail,” he stressed.
Sector Reforms on the Horizon
Minister Adelabu acknowledged that the government shares blame for the current challenges facing the power sector. He pledged not only to settle the debt but also to implement long-overdue reforms aimed at reducing operational bottlenecks.
A major part of these reforms includes advocating for a fully liberalised electricity market with cost-reflective tariffs. Adelabu emphasized that Nigerians must begin paying the actual cost of electricity consumed, although the government will continue to subsidize power for economically vulnerable groups.
“Citizens must pay the appropriate price for the energy consumed. The Federal Government will continue to provide targeted subsidies for economically disadvantaged Nigerians. We have to understand that our economy cannot sustain subsidies indefinitely,” he said. He also called for widespread public education campaigns to foster awareness and compliance with new tariff structures.
GenCos Voice Deepening Concerns Over Economic Pressures
Dr. Joy Ogaji, Chief Executive Officer of the APGC, detailed the array of systemic issues undermining GenCos’ performance. These include chronic non-payment for services, erratic gas supply, inconsistent policies, and foreign exchange volatility. She pointed out that the naira’s sharp decline—from ₦157 to $1 in 2013 to about ₦1,600 to $1 in 2025—has severely damaged GenCos’ ability to maintain their infrastructure and service debt.
“GenCos have borne unsustainable risks—from grid failures to unproductive taxes—while remaining patriotic,” Ogaji lamented. She emphasized that GenCos had continued operations under extreme financial strain in hopes of a solution from the government.
Regulatory Adjustments, Market Stability, and Advocacy Plans
In response, Adelabu announced that the government would initiate comprehensive regulatory reviews to ease the levy burden on GenCos and improve market stability. He urged power generation companies to work together with the ministry in launching advocacy campaigns aimed at educating the public on responsible energy use and the rationale behind tariff adjustments.
He explained that such collaborative efforts were essential in restoring public trust and ensuring smoother implementation of forthcoming reforms.
Mounting Pressure on Federal and State Authorities
The growing concern over Nigeria’s failing power infrastructure has put pressure on state and federal governments to act decisively. Industry insiders say the liquidity crisis in the sector has worsened over the last decade, exacerbated by economic instability, devaluation of the naira, and poor electricity distribution.
Calls have intensified for the Federal Government to review its role in the power sector, including its continued subsidy model, delayed payments, and regulatory lapses. Experts warn that unless the proposed debt repayment and reform strategies are swiftly implemented, the sector could spiral into an even deeper crisis.
What’s Next?
As anticipation builds for the meeting between President Tinubu and the GenCo leadership, expectations are high that a clear timeline and actionable strategy will emerge. Analysts believe that how the government manages this N4 trillion debt challenge could determine the future of Nigeria’s energy sector, which has long suffered from underinvestment, inefficiency, and public distrust.
With every sector of the economy—manufacturing, healthcare, education, and domestic households—relying on stable electricity supply, stakeholders agree that a collapse of the power infrastructure would have devastating consequences nationwide.
The coming weeks are expected to reveal whether the Federal Government can match its promises with decisive and practical action. The fate of the power sector, and indeed the broader Nigerian economy, now hangs in the balance.
