FG Settles N333bn Debt Owed to Power Generation Companies

By Benson Daniel

The Federal Government has disbursed N333 billion to electricity Generation Companies (GenCos) as part of efforts to reduce the mounting debt burden in Nigeria’s power sector and improve electricity supply across the country.

The payment represents a significant step toward addressing longstanding liquidity challenges that have affected power generation companies, many of which have struggled with delayed payments despite supplying electricity to the national grid.

Government officials said the settlement forms part of a broader plan to restore financial stability within the Nigerian Electricity Supply Industry (NESI), improve confidence among investors and ensure that power generation companies have the resources needed to sustain and expand operations.

Industry stakeholders have repeatedly warned that the accumulation of unpaid debts has constrained the ability of GenCos to maintain existing infrastructure, invest in new generation capacity and meet obligations to gas suppliers. They noted that persistent liquidity shortages have remained one of the biggest challenges limiting reliable electricity supply in Nigeria.

Experts believe the N333 billion payment will improve cash flow across the electricity value chain, enabling generation companies to settle outstanding obligations, carry out maintenance on power plants and enhance operational efficiency. They added that the intervention is expected to strengthen confidence among domestic and foreign investors in the sector.

The Federal Government reiterated its commitment to implementing reforms aimed at creating a financially viable and sustainable electricity market. It noted that resolving legacy debts is critical to attracting fresh investments, expanding generation capacity and improving service delivery to households and businesses.

Analysts, however, stressed that while the debt settlement is a positive development, lasting improvements in the power sector will require continued market reforms, cost-reflective tariffs, enhanced revenue collection, improved transmission infrastructure and reduced technical and commercial losses across the electricity network.

They maintained that sustained collaboration among government agencies, electricity generation companies, distribution companies and other stakeholders will be essential to achieving a stable and reliable power supply capable of supporting Nigeria’s economic growth and industrial development.