After months of audit, Tinubu pegs GenCos’ verified debt at N2.8tn

A fresh debate has broken out in Nigeria’s electricity industry after President Bola Tinubu approved N2.8 trillion as the Federal Government’s verified liability to power generation companies (GenCos), rejecting their N6 trillion claim and vowing not to pay beyond the audited amount.

Punch Newspaper reported, quoting presidency and power ministry officials familiar with the negotiations, that the decision followed months of intense back-and-forth and a tripartite audit involving the Ministry of Finance, the Nigerian Bulk Electricity Trading Plc (NBET), and the GenCos themselves.

The generation companies had argued that accumulated electricity subsidies dating back to 2010 had ballooned to between N6tn and N6.6tn. They warned that failure to settle the debt could cripple operations and worsen electricity shortages nationwide. However, the President reportedly insisted on a comprehensive verification process before approving any payment, comparing the initial submissions to the inflated claims that characterised the fuel subsidy regime.

At a meeting in August, GenCos were said to have presented a claim of about N4tn, which was later revised upward. The President directed that the figures be subjected to a detailed audit. The outcome of that review pegged the government’s actual liability at N2.8tn, less than half of what the operators demanded.

Officials disclosed that Tinubu has approved payment strictly in line with the audited figure and made it clear that no additional sums would be recognised.

While the audit was ongoing, the Federal Government raised N501bn in January through a bond issued under the Presidential Power Sector Debt Reduction Programme. The bond was fully subscribed by institutional investors, including pension funds and banks, and the proceeds have already been disbursed as a signal of commitment to resolving the liquidity crisis.

Further payments are expected between May and July, with government sources indicating that an additional N600bn to N800bn could be released, bringing total disbursements to about half of the N2.8tn liability by mid-year. The balance is expected to be paid over the next 12 to 24 months.

Nigeria’s power sector has struggled since the 2013 privatisation of generation and distribution assets for roughly N400bn. Tariffs have remained largely non-cost-reflective, while foreign exchange volatility and revenue shortfalls have left operators unable to meet obligations. National generation capacity continues to fluctuate between 2,000 and 5,000 megawatts, far below demand.

The Nigeria Labour Congress (NLC) has criticised proposals for large-scale payments to GenCos, questioning why companies that acquired public assets for N400bn should receive trillions in government support without commensurate improvements in electricity supply.

To address structural weaknesses, the Presidency has reportedly attached strict conditions to the N2.8tn settlement. A significant portion of the funds will be ring-fenced to clear outstanding debts owed by GenCos to gas suppliers, a recurring source of generation shortfalls and grid instability.

In addition, operators will be required to allocate part of the funds toward infrastructure upgrades and expansion, with evidence of reinvestment mandated. Government officials have expressed concern that inadequate reinvestment has contributed to persistent equipment failures and poor service delivery.

Five companies – First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and Niger Delta Power Holding Company Limited – have already signed settlement agreements with NBET covering N827.16bn in phased instalments.