President Bola Tinubu has greenlit a N2.8 trillion payment to electricity generation companies (GenCos), representing the federal government’s verified liability for accumulated electricity subsidies stretching back to 2010.
This decision, revealed by high-level sources in the Presidency and the Federal Ministry of Power, comes after rigorous negotiations and an audit that dramatically reduced the operators’ initial N6 trillion demand, drawing parallels to the infamous fuel subsidy scandals.
The approval underscores Tinubu’s commitment to fiscal prudence, with the president insisting on paying “not one naira more” than the audited figure, according to officials speaking on condition of anonymity due to restrictions on public commentary.
The move follows months of back-and-forth, including a tripartite audit involving the Ministry of Finance, the Nigerian Bulk Electricity Trading Plc (NBET), and the GenCos themselves. It also arrives just days after the Nigeria Labour Congress (NLC) lambasted the operators for what it termed a “heist” on the national treasury, reigniting debates over the 2013 privatization of the power sector.
Sources close to the negotiations described a tense August meeting last year where GenCos pleaded with the president to settle legacy debts to avert potential shutdowns. “They came here last August to meet the president, pleading that legacy debt doesn’t make them shut down. They said that legacy debt since 2010 is up to N6tn,” one presidency official recounted. “Now, the President told them, ‘That is your claim. You said the government owes you this much, but I’m not going to pay N6tn just because you said the government owes you. We are going to audit. How did you arrive at that amount in your invoices?’ It’s just like the fuel subsidy. Everybody was just bringing fake documents just to make money off the government.”
Initially pegged at N4 trillion during that encounter, the claim ballooned to N6.6 trillion, as disclosed by Dr. Joy Ogaji, CEO of the Association of Power Generation Companies, in a recent television interview.
She warned that the debt was swelling by about N200 billion monthly, exacerbating liquidity crises in the sector. However, the audit process—demanded by Tinubu—slashed it to N2.8 trillion, a figure the president has now endorsed as the final liability.
To demonstrate good faith amid the ongoing scrutiny, the federal government issued a N501 billion bond in January under the Presidential Power Sector Debt Reduction Programme. This bond, fully subscribed by pension funds, banks, and asset managers, was disbursed to the GenCos as an interim payment. “The President said, ‘We are going to raise bonds to pay you. But the only thing now is that we have not agreed on the amount, but I know that whatever it is, it will be more than N2tn. But on account still take N501bn,'” the source explained, likening it to a down payment during negotiations. “What that means is, you said I owe you N1,000. I said, “No, I owe you N600.” But I’m saying, Okay, to show that I’m willing to pay, while we are still negotiating whether it is N500 or N700 or N800, take N100.”
The power sector’s debt crisis traces its roots to the 2013 privatization, when generation and distribution assets were sold for roughly N400 billion. Since then, regulated tariffs failing to cover full generation costs, coupled with liquidity shortfalls and forex constraints, have trapped operators in a vicious cycle of unpaid invoices.
This “electricity subsidy” ballooned as the disparity between consumer payments and actual production expenses grew. In a partial reform, the government removed subsidies for Band A customers on April 3, 2024, hiking rates to N225 per kilowatt-hour, while Bands B through E remained subsidized. Officials claimed this halved the monthly subsidy burden from nearly N500 billion.
Further progress was marked on January 27, 2026, with five GenCos—First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and Niger Delta Power Holding Company Limited—signing settlement agreements with NBET for a total of N827.16 billion, to be paid in four phases.
The NLC’s vehement opposition highlights broader frustrations. Labeling the privatization a “grand deception and a well-orchestrated robbery of the Nigerian people,” the union questions why firms that bought assets for N400 billion now seek trillions in bailouts, especially given stagnant generation capacity hovering between 2,000 and 5,000 megawatts. “Why should companies that acquired national assets for N400bn receive trillions in government support after failing to significantly improve generation capacity?” an NLC statement was queried.
Adding layers to the payout, Tinubu has imposed strict conditions, mandating that a portion of the N2.8 trillion be earmarked to clear GenCos’ debts to gas suppliers—a perennial bottleneck blamed for grid collapses. “The President is now saying this N2.8tn that I’m going to pay you, we’re not just going to pay you like that. He will tie them to percentages. ‘How much do you owe your gas supplier? Because I don’t want to pay you, and you divert the money to buy the next private jet and still return to say gas supply is low,” a presidency source said. The audit reportedly quantified these gas debts, ensuring funds are directed toward stabilizing supply chains.
A power ministry official revealed phased disbursements: An additional N600 billion to N800 billion is slated for release between May and July, pushing total payments to about half the liability by mid-year. The balance will be staggered over 12 to 24 months to bolster liquidity without overwhelming the treasury.
Critics within the government point to systemic underinvestment by both GenCos and distribution companies (DisCos). “The government has also seen that the companies are not investing in expanding or renewing their infrastructure. That is why you also see a lot of issues. They don’t invest more. They are just collecting money.
They are not investing to deliver quality service to the customer,” the source alleged. Drawing a stark contrast with the telecom sector, where providers self-fund base stations, the official decried scenarios where communities foot bills for DisCo-owned transformers. “Look at the telecoms; they are investing in technology and investing in their base stations. So the DisCos and GenCos are collecting money. They are not putting enough of the money back into the business. That is why when a transformer breaks down in a neighborhood, it is still the residents who contribute to buying a new transformer. Why should Nigerians contribute money to go and buy a transformer for a private company?”
As a safeguard, the government has required GenCos to allocate a specified percentage of the funds to infrastructure upgrades, with verifiable proof. “The President is now saying, from this money I’m paying you, we are going to tie this percentage of money to improvement, to invest in your infrastructure, and there must be evidence that the money was invested into the business,” the source added.
This settlement could mark a turning point for Nigeria’s beleaguered power sector, potentially easing liquidity strains and curbing grid instability. However, with the NLC’s scrutiny and ongoing debates over privatization’s efficacy, the path to reliable electricity remains fraught.
As one official put it, the audit’s revelations echo broader calls for transparency: “It’s just like the fuel subsidy—fake documents to siphon funds.” Whether this N2.8 trillion injection sparks genuine reform or merely patches a leaky system will be closely watched in the coming months.
WHAT YOU SHOULD KNOW
President Tinubu has approved N2.8 trillion—not the N6 trillion demanded—as the verified, audited amount the Federal Government owes power generation companies for electricity subsidies since 2010. After months of scrutiny and a tripartite audit that exposed inflated claims, the president insisted on paying only the confirmed figure, imposed strict conditions (ring-fencing funds for gas debts and infrastructure renewal), and rejected any excess payout.
