The Presidency has addressed the controversy surrounding President Bola Tinubu’s approval of a ₦3.3 trillion plan to settle verified legacy debts owed to Power Generation Companies (GenCos) between February 2015 and March 2025.
The initiative, introduced under the Presidential Power Sector Financial Reforms Programme, is designed to stabilise the national grid and enhance electricity supply. So far, ₦223 billion has already been disbursed.
In a statement issued on Sunday by the Special Adviser to the President on Information and Strategy, Bayo Onanuga, it was disclosed that implementation of the repayment plan is already underway, with 15 power plants having signed settlement agreements amounting to ₦2.3 trillion.
However, the approval sparked concerns among GenCos, who called on the President to clarify how the Federal Government arrived at the ₦3.3 trillion figure. They questioned discrepancies between this amount and previously reconciled industry records.
Stakeholders also expressed reservations about the methodology used in calculating the debt, noting that it does not align with figures earlier agreed upon during reconciliation exercises involving market participants and government agencies.
In response, the Presidency stated that the debt settlement is intended to resolve longstanding financial issues within the power sector, rather than serve as compensation beyond verified service delivery.
“The Federal Government of Nigeria is implementing a structured and balanced reform programme to address longstanding financial challenges in the power sector.
“At the core of this effort is a market-based settlement mechanism designed to restore the sector, not reward accumulated claims that extend beyond verifiable service delivery. The objective is to ensure fairness to operators while also protecting the interest of the Nigerian public.
“Between 2015 and 2025, the sector accumulated approximately ₦4.7 trillion in claims across the electricity value chain.
“Following a Presidential stakeholder meeting in July 2025, where the claims of N4.7trillion were presented, a thorough review was recommended by President Bola Tinubu. On August 15, 2025, a ₦4 trillion fiscal cap was approved by the Federal Executive Council, following which a comprehensive verification process was undertaken to verify claims.
“This resulted in a 30 percent reduction in claims, leading to a final negotiated settlement of ₦3.3 trillion, reflecting only valid and contract-backed obligations.
‘To ensure sustainability and avoid fiscal pressure, the settlement is being implemented through a phased, market-based financing framework”, the statement read in part.
The Presidency further explained that the programme will be executed in phases, with Series I estimated at about ₦1.23 trillion. It added that disbursement for Series I, Phase I (January 2026), involving ₦501 billion raised from the domestic capital market, is already in progress.
It confirmed that ₦223 billion has been paid to GenCos and gas suppliers, while ₦197 billion is currently being processed, largely for gas-related obligations.
According to the statement, all payments are conditional and based on verified claims, signed settlement agreements, and proper documentation.
On implementation progress, the Presidency noted that as of January 8, 2026, five GenCos covering 14 power plants had signed agreements worth about ₦827 billion.
By March 31, 2026, the number had increased to 17 GenCos—comprising both public and private operators—covering 17 plants, with agreements valued at approximately ₦2.28 trillion.
“This reflects growing alignment and participation across the sector.
“The financial settlement is also being implemented alongside broader reforms designed to strengthen the sector, including targeted support to ensure affordability for poor and vulnerable households, and tariff reforms aligning higher service bands with cost-reflective pricing to support investment and improve service delivery.
“The programme is designed to restore liquidity, stabilise generation, improve reliability, and reposition the sector for long-term sustainability.
“It also reflects a shift from unverified claims to disciplined, transparent, and market-backed obligations.”
The Presidency emphasised that the initiative is not a one-off intervention but part of a broader effort to reset the financial and operational framework of Nigeria’s power sector.
“The Federal Government remains committed to ensuring that the reforms deliver a stable, reliable, and investable electricity market for the benefit of all Nigerians”, the statement added.
Meanwhile, the Chief Executive Officer of the Association of Generation Companies of Nigeria (APGC), Joy Ogaji, had earlier raised concerns over the parameters used in determining the ₦3.3 trillion verified debt, stating that GenCos were not adequately involved in the process.
The controversy also comes amid the Federal Government’s recent announcement of a ₦501 billion power sector debt resettlement bond.