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FG, GenCos seal N4trn power sector debt payment agreement



The Federal Government has finalised the implementation frameworks for a N4 trillion government-backed bond aimed at settling verified arrears owed to power Generation Companies (GenCos) and gas suppliers.

This was made known in a release signed by Senan Murray, Media and Communications Unit, Office of the Special Adviser to the President on Energy, on Tuesday.

According to the statement, the Presidential Power Sector Debt Reduction Plan is an initiative approved by President Bola Ahmed Tinubu to address structural bottlenecks and lay the groundwork for large-scale private sector-led investment and sustained economic growth.

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The statement stated that the meeting concluded with a consensus on the next steps, including bilateral negotiations to finalise comprehensive settlement agreements that balance fiscal realities with the financial challenges facing the GenCos.

It read: “Approved by President Tinubu and endorsed by the Federal Executive Council (FEC) in August 2025, the plan authorises the issuance of up to N4 trillion in government-backed bonds to settle verified arrears owed to generation companies and gas suppliers.

“This intervention, the largest in over a decade, addresses a legacy debt overhang that has constrained investment, weakened utility balance sheets, and hindered reliable power delivery across the country.”

Generation Company (GenCo) owners commended President Tinubu’s intervention, citing a credible and systematic effort by the government to tackle the root liquidity challenges in the power sector.

Tony Elumelu, Chairman of Heirs Holdings and Transcorp Power, said: “For the first time in years, we are seeing a credible and systematic effort by government to tackle the root liquidity challenges in the power sector. We commend President Tinubu and his economic team for this bold and transformative step.”

Also, Kola Adesina, Group Managing Director of Sahara Group, echoed this sentiment: “This initiative is significant in every respect. It gives us renewed confidence in the reform process and a clear signal that the government is serious about building a sustainable power sector.”

Olu Verheijen, Special Adviser to the President on Energy, said that the step would also help in closing metering gaps, aligning tariffs with efficient costs, improving subsidy targeting to support the poor and vulnerable, and restoring regulatory trust.

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“Our focus is on creating the right conditions for investment, from modernizing the grid and improving distribution to scaling embedded generation,” she said. “By closing metering gaps, aligning tariffs with efficient costs, improving subsidy targeting to support the poor and vulnerable, and restoring regulatory trust, we are shifting from crisis response to sustained delivery and building the confidence needed to attract large-scale private capital.”



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