Tinubu Holds Talks with Chairman of Generating Companies, Requests Extension for Verification of 4 Trillion Naira Debt Portfolio
Nigeria's Power Sector Faces Significant Financial Strain Under Tinubu Administration
President Bola Ahmed Tinubu's administration is making a fresh attempt to reset confidence in Nigeria's power sector, as the country grapples with a ₦4 trillion (around $8.5 billion) debt owed to electricity generation companies (GenCos).
In a meeting led by retired Colonel Sani Bello, Tinubu appealed for patience from GenCos and reiterated his commitment to creating a stable investment environment. The President also insisted on thorough scrutiny of the claims, with a promise to address the sector's challenges fairly, transparently, and with due diligence.
As of April 2025, the government's verified exposure to the GenCos stands at ₦4 trillion, made up of legacy debts dating back to 2015. The President's Special Adviser on Energy, Olu Verheijen, revealed that Tinubu has given anticipatory approval for a ₦4 trillion bond program to address the sector's liquidity crisis.
The debt problem arises despite the existence of the “remittance obligation framework,” through which distribution companies (DisCos) pay the Nigerian Bulk Electricity Trading Company (NBET) based on consumer tariffs, and the Federal Government covers the subsidy shortfall directly. In Q1 2025, the government increased electricity subsidies to ₦536.4 billion ($350 million), covering about 59% of the total billed costs to DisCos, but it has struggled to meet its financial commitments, leading to rising debts along the electricity value chain.
Tinubu urged the power firms to allow time for verification of the debts owed to them. The Minister of Power, Adebayo Adelabu, has praised the administration’s reforms for restoring investor confidence and improving sector performance. However, challenges remain, with the subsidy bill having risen sharply, and the government paying only about ₦371 billion out of ₦1.94 trillion owed to NBET by the end of 2024, pushing total debts close to ₦5 trillion.
Specific entities like the FG-owned Ajaokuta Steel Company have accrued huge electricity debts (about ₦5.6 billion) despite being non-operational for decades, indicating broader systemic issues in debt recovery and management from government-linked bodies.
In summary:
| Aspect | Status as of April 2025 | |----------------------------------|-------------------------------------------------------------| | Total verified government debt to GenCos | Approx. ₦4 trillion, pending final validation | | Electricity subsidies paid by government (Q1 2025) | ₦536.4 billion (~$350 million) covering ~59% of billed cost | | Government's reform efforts | Reviewing GENCO contracts, proposing a ₦4 trillion bond, restoring investor confidence | | Ongoing challenges | Rising subsidy bill, payment shortfalls, risks of sector collapse | | Notable debt cases | Ajaokuta Steel Company owes ₦5.6 billion, facing power disconnection |
These developments indicate active federal efforts under President Tinubu to address the debt crisis in Nigeria’s electricity sector, but the financial strain and sector vulnerabilities remain significant as of mid-2025.
- President Tinubu's administration is working diligently to alleviate the financial strain in Nigeria's power sector, which currently faces a debt of approximately ₦4 trillion.
- In an attempt to create a stable investment environment, President Tinubu has approved a ₦4 trillion bond program to address the sector's liquidity crisis.
- The Nigerian industry, particularly the power sector, under Tinubu's administration, is grappling with challenges such as rising subsidy bills and payment shortfalls, posing a risk of sector collapse.
- Notably, even though the Ajaokuta Steel Company in Naija has been non-operational for decades, it has accrued a substantial debt of ₦5.6 billion towards electricity bills, highlighting systemic issues in debt recovery and management from government-linked bodies.
- Despite these ongoing challenges and the significant financial strain, President Tinubu's reforms have managed to restore investor confidence and improve sector performance, according to the Minister of Power, Adebayo Adelabu, in the bustling city of Lagos or possibly the administrative capital, Abuja.
