•We are already settling the debts amounting N4trn – FG•It’s N7trn, no payment has happened – GENCOs

By Ediri Ejoh

The Federal Government has said it is offsetting the power sector’s debt, which it said has risen to about N4 trillion.

This came as the Generation Companies, GENCOs, fault the claims, insisting that the sector has incurred over N7 trillion debt on its government services.

Speaking at the Nigerian-British Chamber of Commerce Energy Day 2026, held in Lagos, Special Adviser to the President on Oil and Gas, Mrs. Olu Verheijen, stated that Tinubu’s administration is restoring financial viability to the gas-to-power chain, adding that for years, the power sector was constrained by accumulated arrears, weak payment discipline and tariff distortions.

She said that the Presidential Power Sector Debt Reduction Programme was built to address the challenges directly.

According to her the Federal Executive Council approved a bond programme of up to N4 trillion to settle verified generation and gas-company arrears.

She stated: “Under it, generation companies have signed full and final settlement agreements worth about N2.28 trillion.

“The N501 billion Series 1 bond was issued and oversubscribed, with payments to generation and gas companies now underway.

“A second series of N729 billion will follow to complete the first phase,” adding that the fund was not a bailout but a strategic reset that cleared verified arrears, restored liquidity, and gave operators the footing to invest with confidence.

In a swift reaction, however, the GENCOs under the aegis of the Association of Power Generation Companies rejected the Federal Government’s reduction of the debt, insisting that the full amount remains outstanding and severe liquidity crisis currently affecting the industry is deeply concerning.

The Association’s Chief Executive Officer, Joy Ogaji said, “Today, Nigeria’s GENCOs are owed over N7trillion for electricity generated and supplied to the national grid, with a monthly payment shortfall of N200bn.

“This debt has accumulated over several years, 2015 -2026. Approximately ¦ 4 trillion represents legacy debt from 2015 to 2024, while the balance has continued to grow due to persistent market shortfalls.

“Despite making generation capacity available, GenCos receive only about 35% of their monthly invoices, making it extremely difficult to meet critical operational obligations, including payments to gas suppliers, equipment manufacturers, and maintenance contractors.

“Nigeria currently has an installed generation capacity of about 15,500 MW, with roughly 7,000 MW available for dispatch. However, due to transmission and distribution limitations, the grid typically accommodates between 3,000 and 4500 MW.

“Electricity generation companies (GenCos) are the foundation of the Nigerian Electricity Supply Industry (NESI). GenCos incur significant costs in gas procurement, operations and maintenance, staff costs, debt servicing, regulatory compliance, and capital expenditure.

“Despite generating electricity and issuing invoices through the market, a substantial portion of their invoices remains unpaid, leading to growing receivables and liquidity challenges.”

On the nature of the indebtedness, she stated that “Government indebtedness arises primarily from: historical market shortfalls, inadequate remittances across the electricity value chain and subsidy-related obligations.”

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