Good News: Tinubu Makes Major Move to Solve Electricity Crisis

President Bola Ahmed Tinubu has approved a N3.3 trillion payment plan aimed at settling long-standing debts owed to power Generation Companies (Gencos) as well as Gas Companies (Gascos) in a move designed to address persistent liquidity crisis in Nigeria’s electricity sector.

The presidency said the approval followed a final verification and reconciliation of legacy obligations accumulated between February 2015 and March 2025 under the Presidential Power Sector Financial Reforms Programme.

The intervention is expected to improve cash flow within the electricity market, particularly for Gencos and gas suppliers, who have faced prolonged payment delays that have constrained generation capacity and weakened overall system performance, the presidency stated.

Nigeria’s mounting debt to Gencos is rooted in the structural weaknesses that followed the 2013 privatisation of the sector. Under the current market model, Gencos sell electricity to the Nigerian Bulk Electricity Trading Plc (NBET), which in turn supplies Distribution Companies (Discos).

However, chronic under-collection of revenue by Discos, driven by poor metering, energy theft, and weak tariff enforcement, has meant that only a fraction of market invoices is ever settled, prompting government’s intervention in the form of subsidies.

Compounding the problem is the long-standing refusal by the government to fully implement cost-reflective tariffs. Electricity prices have remained politically sensitive and often set below the actual cost of generation and supply, creating a persistent funding gap. As a result, NBET has been unable to meet its payment obligations to Gencos, leading to a build-up of debt now estimated at N6 trillion by the Gencos.

Besides, the liquidity crisis has had cascading effects across the power value chain. Gencos, faced with cash flow constraints, struggle to maintain plants or pay gas suppliers, leading to reduced generation capacity, despite installed potential. Gas producers, wary of non-payment, have also limited supply to power plants, further worsening outages, especially in recent weeks.

The situation has eroded investor confidence and slowed the much-needed investment in the sector, even as unreliable grid supply has forced businesses and households to rely heavily on self-generation, raising production costs and contributing to inflationary pressures.

But according to a State House statement issued by presidential spokesman, Bayo Onanuga, yesterday, the N3.3 trillion figure represents a full and final settlement of the debts, providing what the government described as a transparent and equitable resolution for stakeholders across the power value chain.

As part of the implementation, 15 power generation companies have already signed settlement agreements with the federal government covering a total of N2.3 trillion, according to the statement.

The statement stressed that the government had so far raised N501 billion to kick-start the process, out of which N223 billion had been disbursed, with further payments ongoing.

The presidency expressed optimism that as funds begin to flow through the value chain, power generation will stabilise, leading to improved electricity supply to homes and businesses.

Tinubu also commended stakeholders for their role in resolving the long-standing issues and confirmed that a second phase of the programme was expected to commence later this quarter.

The statement said, “President Bola Tinubu has approved the payment plan to finally settle the outstanding debts under the Presidential Power Sector Financial Reforms Programme. The debt repayment plan followed the final review of the legacy debts that have beset the power sector for more than a decade.

“The long-standing debts accumulated between February 2015 and March 2025. Following verification, N3.3 trillion has been agreed as a full and final settlement, ensuring a fair and transparent resolution.”

The statement added, “Implementation has begun, with 15 power plants signing settlement agreements totalling N2.3 trillion. The Federal Government has already raised N501 billion to fund these payments. Out of the amount, N223 billion has been disbursed, with further payments underway.

“What this means for Nigerians (is that) with payments reaching the power value chain, generation will be more stable. With power plants supported, electricity reliability will improve. And as the sector stabilises, more investment, more jobs, and better service will follow.”

In his remarks, Special Adviser to the President on Energy, Olu Verheijen, said the initiative went beyond debt settlement and was intended to rebuild confidence in the sector.

Verheijen added that the plan formed part of a broader reform agenda that included ongoing metering initiatives and implementation of service-based tariffs aimed at aligning electricity pricing with quality of supply.

She stated that the government was also prioritising improved electricity access for businesses and industries, stressing that reliable power is critical to job creation and economic growth.

Verheijen explained, “This programme is not just about settling legacy debts. It is about restoring confidence across the power sector, ensuring gas suppliers are paid, power plants can keep running, and the system begins to work more reliably.

“It is part of a broader set of reforms already underway — including better metering and service-based tariffs that link what you pay to the quality of electricity you receive.

“The government is also prioritising power supply to businesses, industries, and small enterprises — because reliable electricity is critical to creating jobs, supporting livelihoods, and growing the economy.

“The goal is simple: more reliable power for homes, stronger support for businesses, and a system that works better for all Nigerians.”

With an Installed generation capacity officially put at about 13,000 megawatts (MW), Nigeria’s actual available capacity typically fluctuates between 4,000 MW and 5,500 MW, depending on gas supply, grid stability, and plant conditions.

But in practice, Nigeria’s average daily generation often hovers around 4,000 MW, for a country of over 200 million people. By comparison, South Africa, with roughly a quarter of Nigeria’s population, regularly generates over 20,000 MW.

On a per capita basis, Nigeria produces roughly 20–25 watts per person, far below the global average, which exceeds 1,000 watts per person in industrialised economies.

Transmission remains a major bottleneck as the grid, managed by Transmission Company of Nigeria (TCN), has a wheeling capacity of about 8,000 MW, though it rarely sustains that level due to frequent system constraints and collapses. Nigeria has recorded multiple grid collapses annually, disrupting supply nationwide.

Distribution is even weaker. Nigeria’s 11 distribution companies collect only about 60–70 per cent of billed revenue on average. Aggregate Technical, Commercial and Collection (ATC&C) losses remain high, often above 40 per cent in some networks. This means a significant portion of electricity supplied is either lost, stolen, or unpaid for.