President Bola Tinubu has announced a substantial financial initiative aimed at revitalizing Nigeria’s power sector, approving a payment plan of 3.3 trillion naira (approximately $2 billion) to address long-standing debts. This move is part of a broader strategy to enhance electricity supply across the nation.
The initiative targets legacy debts accrued between February 2015 and March 2025, as part of the Presidential Power Sector Financial Reforms Programme. A verification process confirmed the total obligations, leading to the establishment of this comprehensive settlement aimed at restoring financial stability within the sector.
Implementation of the plan is already underway, with 15 power generation companies entering into agreements worth 2.3 trillion naira. The federal government has secured 501 billion naira to support this initiative, with 223 billion naira already disbursed and additional payments in progress.
Officials emphasize that clearing these debts will improve liquidity throughout the electricity value chain, ensuring timely payments to gas suppliers and enabling power plants to operate effectively. This, in turn, is expected to lead to a more reliable electricity supply for consumers.
Olu Arowolo-Verheijen, the special adviser to the president on energy, highlighted that this initiative goes beyond merely settling debts; it aims to restore confidence in the power sector, ensuring that essential suppliers are compensated and that the system functions more reliably.
The government believes that enhanced funding for generation companies will stabilize electricity output, addressing one of the critical barriers to consistent power supply in Nigeria. This intervention is also part of broader reforms, which include plans to expand metering and implement service-based tariffs that reflect the quality of electricity service provided.
For years, Nigeria has faced challenges related to inadequate electricity supply, stemming from funding shortfalls, infrastructural issues, and liquidity problems within the power market. Authorities have indicated that a second phase of the reform program is anticipated to commence later this quarter, as the government continues its efforts to strengthen the sector and deliver more reliable electricity to both households and businesses.
