GenCos Say No Final Agreement Yet on N4tn Power Sector Debt

Despite recent announcements from federal authorities, Nigeria’s power generation companies have clarified that negotiations over the N4 trillion legacy debt owed by the government are still ongoing and no binding agreement has been reached.

Dr. Joy Ogaji, Chief Executive Officer of the Association of Power Generation Companies (APGC), confirmed that while meetings have taken place between GenCos and top government officials, including the Ministers of Power and Finance, discussions remain inconclusive.

The Federal Government had earlier declared that it had finalized an implementation framework for the Presidential Power Sector Debt Reduction Plan, which includes the issuance of government-backed bonds to settle verified arrears owed to electricity generation companies and gas suppliers. The initiative, approved by President Bola Tinubu and endorsed by the Federal Executive Council in August 2025, is aimed at restoring financial stability and investor confidence in the sector.

However, Ogaji emphasized that the GenCos were not fully involved in the verification process and have yet to see concrete details regarding payment timelines or settlement terms. She noted that although chairpersons of the companies were invited to discuss modalities, no final decisions have been made.

The APGC had previously written to the Nigerian Bulk Electricity Trading Plc (NBET) seeking clarification on the process, expressing concern over the lack of transparency and inclusion.

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During a high-level meeting held on October 7, senior executives from the power generation sector met with the Special Adviser to the President on Energy, Olu Verheijen, alongside Finance Minister Wale Edun and Power Minister Adebayo Adelabu. The outcome reportedly included a consensus to pursue bilateral negotiations that would balance fiscal constraints with the financial realities faced by GenCos.

Industry leaders welcomed the initiative, describing it as a long-overdue intervention. The Chairman of Heirs Holdings and Transcorp Power praised the government’s effort to address liquidity challenges, while Transcorp Plc’s CEO, Owen Omogiafo, revealed that the company is owed approximately ₦650 billion for electricity supplied. The Sahara Group also expressed optimism, calling the plan a significant step toward sector reform.

Despite these endorsements, GenCos remain cautious. Ogaji highlighted ongoing operational challenges including reduced gas supply, urgent maintenance needs, and mounting pressure from unpaid creditors. She warned that without timely payments, power generation could be severely impacted.

According to APGC data, GenCos issue monthly invoices averaging ₦270 billion, but receive only about ₦70 billion in payments, leaving a shortfall of ₦200 billion each month. Ogaji criticized the 2025 federal budget allocation of ₦900 billion to the power sector, noting that it lacks sufficient cash backing and falls short of addressing the sector’s financial needs.

The Presidential Power Sector Debt Reduction Plan is being coordinated by the Ministries of Finance and Power, the Office of the Special Adviser on Energy, and NBET, with the goal of creating a sustainable and investor-friendly electricity market. However, GenCos insist that until clearer terms are presented and verified, the debt resolution remains a work in progress.