The Federal Government has finalized the implementation framework for the Presidential Power Sector Debt Reduction Plan, a landmark initiative by President Bola Ahmed Tinubu aimed at restoring financial stability and investor confidence in Nigeria’s electricity market.
The plan, approved by the Federal Executive Council (FEC) in August 2025, authorizes the issuance of up to ₦4 trillion in government-backed bonds to settle verified arrears owed to electricity generation companies (GenCos) and gas suppliers — a long-standing debt burden that has stifled investment and weakened the power sector’s operational capacity.
In a high-level meeting held on Tuesday, October 7, 2025, in Abuja, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, the Minister of Power, Chief Bayo Adelabu, and the Special Adviser to the President on Energy, Mrs. Olu Verheijen, met with senior executives of GenCos to review settlement modalities and agree on a path forward.
The meeting concluded with a consensus to begin bilateral negotiations that will produce full and final settlement agreements balancing the Federal Government’s fiscal realities with the financial constraints faced by the GenCos.
“For the first time in years, we are seeing a credible and systematic effort by government to tackle the root liquidity challenges in the power sector,” said Mr. Tony Elumelu, Chairman of Heirs Holdings and Transcorp Power.
“We commend President Tinubu and his economic team for this bold and transformative step.”Echoing this sentiment, Mr. Kola Adesina, Group Managing Director of Sahara Group, described the initiative as “significant in every respect,” adding that it gives operators “renewed confidence in the reform process and a clear signal that the government is serious about building a sustainable power sector.
”Beyond clearing arrears, the debt reduction plan represents a strategic reset of Nigeria’s electricity market. By improving the liquidity and balance sheets of power companies, it is expected to unlock new investments in generation capacity, modernize grid infrastructure, and enhance electricity reliability for homes and businesses.
“Our focus is on creating the right conditions for investment — from modernizing the grid and improving distribution to scaling embedded generation,” said Mrs. Verheijen.
“By closing metering gaps, aligning tariffs with efficient costs, improving subsidy targeting, and restoring regulatory trust, we are shifting from crisis response to sustained delivery.”
According to Edun, the reforms are part of a broader agenda to rebuild the fundamentals of Nigeria’s energy economy.
“These reforms go beyond liquidity. They are about ensuring the power sector works for investors, citizens, and the next generation.
This is how we create the enabling conditions for sustained private investment and turn reliable power into a catalyst for growth,” he said.
The Presidential Power Sector Debt Reduction Plan is being implemented jointly by the Federal Ministry of Finance, the Federal Ministry of Power, and the Office of the Special Adviser to the President on Energy, in collaboration with the Nigerian Bulk Electricity Trading (NBET) Plc and other key sector stakeholders.
Complementary reforms to scale renewable energy, expand the role of domestic gas as a transition fuel, and build technical and institutional capacity are expected to position Nigeria for energy security and sovereignty, creating one of Africa’s most attractive power markets.
