Tinubu approves N2.8trn power debt, rejects inflated bills

President Bola Ahmed Tinubu has approved N2.8trn as the Federal Government’s verified electricity subsidy debt to power generation companies (GenCos), rejecting their N6tn claim after a detailed audit.

Officials in the Presidency and the Federal Ministry of Power said the decision followed months of negotiations and a tripartite review involving the Ministry of Finance, the Nigerian Bulk Electricity Trading Plc and the GenCos.

Sources said the President insisted public funds would only be paid based on audited figures, describing the operators’ earlier submissions as inflated. The verified liability now stands at N2.8tn — less than half of what GenCos demanded.

As a sign of commitment during negotiations, the government earlier raised N501bn through a bond under the Presidential Power Sector Debt Reduction Programme, which has already been disbursed. Additional payments of between N600bn and N800bn are expected by mid-year, with the balance to be settled over 12 to 24 months.

The power sector debt dates back to the 2013 electricity privatisation, when tariff shortfalls, liquidity gaps and foreign exchange pressures led to mounting unpaid invoices classified as subsidy obligations.

The GenCos, represented by the Association of Power Generation Companies, had warned that the debt was rising by about N200bn monthly and could threaten generation capacity.

Tinubu’s approval comes with conditions. Government sources said part of the funds will be ring-fenced to settle GenCos’ outstanding gas bills — a key factor behind recurring grid instability — while another portion must be invested in infrastructure upgrades with proof of compliance.

The move follows criticism from the Nigeria Labour Congress, which opposed large bailout payments and questioned the value delivered by private electricity operators since privatisation.

Officials said the government’s approach aims to restore liquidity to the power sector, ensure debts to gas suppliers are cleared, and compel generation companies to reinvest in infrastructure to improve electricity supply.