The Minister of Finance Wale Edun has proposed a settlement plan for the federal government’s N4 trillion (£3.2bn) debt to electricity generation companies.
Wale Edun, who serves as both Finance Minister and Coordinating Minister for the economy, presented the proposal on Wednesday during the Federal Executive Council meeting chaired by President Bola Tinubu.
Speaking to journalists after the cabinet session at Abuja’s State House, Mr Edun confirmed he had tabled a memorandum addressing what he described as “outstanding obligations in the electricity industry.”
“I presented a memo on the all-important refinancing of the electricity sector’s outstanding obligations totalling N4 trillion,” the minister said.
“Though the financing plan was not fully approved immediately, we have moved into implementation, led by the Debt Management Office and other experts.”
The minister said the first phase of the process should be completed within three to four weeks, which will mark significant progress in resolving the debt.
Refinancing is when a loan is replaced with another one. This means paying off a debt with another debt obligation.
In April 2025, power generation companies (GenCos) warned that the N4 trillion unpaid debt owed by the federal government and stakeholders for electricity generated threatens their operations.
A breakdown of the debt includes N2 trillion for 2024 and N1.9 trillion in legacy debts.
Earlier in May, Adebayo Adelabu, minister of power, said the federal government may borrow to settle part of the N4 trillion debt owed to power generation companies (GenCos).
Spear News reports that President Bola Tinubu on July 26, requested electricity generation companies (GENCOs) to allow time for verification of Nigeria’s N4 trillion (£3.2bn) power sector debt before authorising settlement.
The president gave anticipatory approval for a bond programme to address the liabilities during talks with GENCO representatives at Abuja’s State House.
The debt crisis stems from years of unpaid invoices by electricity distributors, with only N1.8tn of claims verified so far. Special Adviser on Energy Olu Verheijen confirmed the government is currently liable for N4tn in legacy debts dating to 2015, though final figures remain subject to audit.
While reforms under the 2023 Electricity Act have improved grid stability and attracted $2bn in private investment, Power Minister Adebayo Adelabu warned the liquidity crunch risks undermining progress. Generation capacity has grown to 14,000MW with fewer grid collapses, but gas shortages and bank foreclosures threaten operations.
Business leaders Tony Elumelu and Kola Adesina appealed for urgent intervention, noting unpaid debts have left GENCOs struggling to pay gas suppliers. The meeting, attended by key ministers and regulators, signals the administration’s prioritisation of resolving the decade-old crisis hampering Nigeria’s power sector.
The proposed refinancing package comes as Africa’s largest economy struggles with chronic power shortages despite having Africa’s largest gas reserves.
The finance minister didn’t disclose specific repayment timelines or funding sources for the proposed settlement, which would represent one of Nigeria’s largest-ever energy sector interventions if approved.
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