President Bola Tinubu has approved a N3.3 trillion payment plan aimed at settling outstanding debts in Nigeria’s electricity sector, a move that is expected to significantly enhance the country’s power generation capabilities. The debts, which accumulated over a decade from February 2015 to March 2025, have posed substantial challenges to the operational efficiency of power generation companies.

Implementation of this plan has already commenced, with 15 power generation companies signing settlement agreements valued at ₦2.3 trillion. The federal government has successfully raised ₦501 billion to fund these payments, of which ₦223 billion has already been disbursed. This financial intervention is seen as a crucial step in restoring liquidity across the power value chain.

Olu Arowolo-Verheijen, a key figure in the initiative, emphasized the broader implications of the program, stating, “This programme is not just about settling legacy debts. It is about restoring confidence across the power sector — ensuring gas suppliers are paid, power plants can keep running, and the system begins to work more reliably.” This sentiment underscores the government’s commitment to not only addressing past debts but also ensuring the sustainability of power supply in Nigeria.

The initiative is also designed to include improved metering and service-based tariffs that are linked to the quality of electricity supply. This approach aims to provide a more reliable power supply to industries, businesses, and small enterprises, thereby supporting economic growth and reducing the operational costs that have plagued many businesses due to unreliable power.

Despite the positive outlook, the Nigeria Labour Congress has voiced criticism regarding the demands from power generation companies for financial intervention, highlighting concerns about the sustainability of such measures. The power supply challenge has significantly increased operating costs for businesses, many of which have been forced to pass the additional burden on to consumers through higher prices of goods and services.

Looking ahead, the next phase of the programme, referred to as Series II, is set to commence this quarter. This phase is expected to build upon the initial successes of the debt settlement plan and further enhance the operational capacity of the electricity sector.

As the government moves forward with these initiatives, observers remain hopeful that the measures will lead to a more reliable power supply for Nigerians. However, details remain unconfirmed regarding the specific timelines and additional funding sources that may be required to sustain these efforts in the long term.

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