Eight GenCos Sign N3.3tn Power Debt Settlement Deal

Eight of Nigeria’s biggest power generation companies, including Transcorp Power, Egbin Power and Geregu Power Plc, have signed on to President Bola Tinubu’s N3.3 trillion power debt settlement plan aimed at easing the long-running liquidity crisis in the electricity sector.

The agreement covers 15 power plants operated by six private firms and two government-owned entities. It is seen as one of the biggest efforts yet to clear the huge debt burden that has slowed investment, disrupted maintenance and weakened power supply across the country.

Among the major companies that joined the deal is Egbin Power Plc, Nigeria’s largest power station, with an installed capacity of 1,320 megawatts across six units in Ikorodu, Lagos.

Geregu Power Plc, which runs its main plant in Ajaokuta, Kogi State, is also part of the deal. Two Transcorp-linked companies, Transcorp Delta in Ughelli and Afam Power in Oyigbo, Rivers State, also signed on.

Other private participants include First Independent Power Limited, which operates four gas turbine plants in Rivers State with a combined installed capacity of 541 megawatts, and Mabon Limited, a private firm managing a hydropower concession in Gombe State.

On the public side, the Niger Delta Power Holding Company joined the deal with nine plants, including those in Olorunsogo, Ihovbor, Omotosho, Alaoji, Calabar, Egbema, Gbarain and Sapele. Ibom Power Company, owned by the Akwa Ibom State Government, also signed the agreement.

Despite the participation of eight companies, concerns remain over the N3.3 trillion figure announced by the government. Joy Ogaji, Chief Executive of the Association of Power Generation Companies, said the amount does not match figures discussed during the last formal reconciliation between GenCos and government agencies, which ended in March 2025.

She said GenCos still do not understand how the N3.3 trillion figure was arrived at, raising questions over whether it covers only invoices, includes gas debts, or reflects claims from 2015 to 2024.

Since the privatisation of the power sector in 2013, the electricity value chain has struggled with chronic underpayment. Distribution companies often fail to recover enough revenue, leaving generation companies unable to settle obligations to gas suppliers and other service providers.

Ogaji said the debts being claimed by GenCos go beyond unpaid invoices. According to her, they also include capacity payments, deemed capacity charges, foreign exchange losses arising from the naira’s depreciation, and additional operating costs from frequent plant start-ups and shutdowns.

She added that some power plants now face more than 365 start-ups and shutdowns in a year, compared to about 20 previously, causing heavy wear on equipment and pushing up maintenance costs.

GenCos are also claiming unpaid VAT on gas supplied between 2013 and September 2021, along with interest on delayed payments calculated at the Nigerian Interbank Offered Rate plus four percentage points.

Ogaji also questioned the use of NBET as the primary data source for the debt calculation, saying only a full reconciliation can produce the true figures.

A senior government official involved in the talks said President Tinubu had rejected claims as high as N7 trillion and insisted on verified figures before approving any settlement. According to the official, the N3.3 trillion represents what the government considers an audited and defendable liability.

The official said the settlement is meant to stabilise the sector, not reward inflated or unverified claims. Any disbursement, the source added, will be subject to clear conditions, including payment to gas suppliers, settlement with other service providers, and investment in plant rehabilitation and expansion.

The government also plans to monitor how the funds are used.

Power sector analyst Ade Olaniyi said both the government and the GenCos must agree on a single, clear, and transparent figure before any lasting solution can be achieved.

Nigeria currently generates between 4,000 and 5,000 megawatts of electricity for a population of more than 220 million people, far below what is needed. Clearing the sector’s debt burden is widely seen as key to attracting the investment required to improve supply.