Tinubu Tackles Nigeria's Power Debt Crisis: N4 Trillion Bond Program Approved
President Bola Tinubu's recent meeting with the Association of Power Generation Companies (GENCOs) highlights the critical liquidity crisis plaguing Nigeria's power sector. The administration is actively working to resolve the long-standing debts owed to these companies and stabilize the electricity supply.
The Debt Burden and Verification Process:
₦4 Trillion Claim: GENCOs assert a collective claim of over ₦4 trillion in debts, accumulated since 2015. These liabilities stem from unfunded tariff shortfalls and systemic market deficiencies, significantly hampering their operational capacity and investment potential.
Verification Underway: President Tinubu acknowledged these inherited liabilities and stressed the necessity of a transparent and credible audit process. He appealed to GENCOs and their financial partners for patience, emphasizing the government's need for time to thoroughly verify and validate these claims. Various government agencies, including audit and legal firms, are actively scrutinizing the alleged debts.
Partial Validation: Mrs. Olu Verheijen, Special Adviser to the President on Energy, disclosed that out of the ₦4 trillion claimed by GENCOs from 2015 to the end of 2023, the Nigerian Bulk Electricity Trading Company (NBET) has so far validated ₦1.8 trillion. As of April 2025, the total verified exposure carried by the Federal Government, including ₦200 billion in unfunded subsidies, amounts to ₦4 trillion. This figure, however, remains subject to downward revision pending final validation.
Addressing the Liquidity Shortfall:
Anticipatory Approval for ₦4 Trillion Bond: To address the severe liquidity challenges, President Tinubu has granted anticipatory approval for a ₦4 trillion bond program. This bond is designed to bridge the financial gap in the sector and ensure payments to GENCOs.
Bond Conditionality: Mrs. Verheijen clarified that while anticipatory approval has been granted, the bond program is contingent on ongoing negotiations and the finalization of settlement agreements. Only the genuinely owed amounts, as determined by the verification process, will be included in the bond issuance, which will be coordinated by the Debt Management Office (DMO).
Appeal to Financial Institutions: President Tinubu also urged financial institutions to exercise restraint and avoid foreclosures on GENCO assets. He encouraged them to collaborate with the government in resolving the current crisis.
Impact of Presidential Power Initiative (PPI) and Sector Reforms:
No National Grid Collapse in 2025: A significant achievement highlighted by the Minister of Power, Chief Adebayo Adelabu, is the absence of any national grid collapse in 2025. This success is directly attributed to interventions under the Presidential Power Initiative (PPI), which has added over 700MW of transmission capacity.
Increased Generation and Delivery: The sector has seen substantial improvements, with installed generation capacity increasing from 13,000 MW to 14,000 MW. An all-time peak generation of 5,801 MW and a record maximum daily energy delivery of 120,370 MWh were achieved on March 4, 2025.
Electricity Act 2023: The enactment of the Electricity Act 2023 was a pivotal step towards liberalizing and decentralizing Nigeria's electricity market. This, coupled with Nigeria's first Integrated National Electricity Policy in 24 years, aims to bring much-needed coherence to sector planning and development.
Increased Revenue and Investment: The administration's reforms have attracted over $2 billion in new private capital. Furthermore, the sector's annual revenue has grown by an impressive 70%, from ₦1 trillion in 2023 to ₦1.7 trillion in 2024, leading to a substantial reduction in government subsidy obligations by over ₦700 billion.
Metering Initiatives: Significant progress is being made in bridging the metering gap through the ₦700 billion Presidential Metering Initiative (funded via FAAC) and the World Bank-supported Distribution Sector Recovery Programme (DISREP), which has facilitated the delivery of 300,000 smart meters out of a target of 3.45 million procured. The Federal Government aims for a full rollout of free electricity meters by Q4 2025.
Despite these positive developments, the Minister of Power cautioned that the lingering liquidity crisis, primarily due to the debt overhang, remains a significant threat that could lead to a shutdown of generation assets if not addressed promptly and sustainably. The government's immediate priority is to finalize the verification process efficiently and implement a viable payment plan.
I'm Aisha shehu
Talksocialtalka News
