Power: FG to Clear GenCos’ Legacy Debts in 2027 — Tegbe

The Federal Government plans to complete payments of outstanding legacy debts owed to electricity generation companies (GenCos) by 2027, Minister of Power Joseph Tegbe has said.

Tegbe disclosed this on Friday at the Harvard Business School Association of Nigeria’s Energy Conference in Lagos, saying the government had already raised about ₦1.23 trillion through bond issuances to address the long-standing obligations.

“We have brought in bonds. We’ve paid about ₦1.23 trillion successfully, we plan to finish paying by next year,” the minister said.

The debt settlement is part of the Federal Government’s broader effort to improve liquidity in Nigeria’s electricity market and strengthen the financial position of power generation companies.

The government’s Presidential Power Sector Debt Reduction Programme targets verified outstanding obligations accumulated between February 2015 and March 2025. The broader settlement plan was approved by President Bola Tinubu to address debts that have constrained operators across the electricity value chain.

The Nigerian Bulk Electricity Trading Plc (NBET) has also begun settling participating GenCos and their associated gas suppliers following the issuance of a second bond worth approximately ₦728.97 billion. The latest issuance followed an earlier bond of about ₦501 billion in January 2026.

Tegbe said, however, that clearing the backlog alone would not resolve the sector’s persistent financial challenges. He said the government was reviewing the electricity market structure to prevent the accumulation of fresh debts.

The minister questioned the existing model, under which NBET purchases electricity from generation companies and sells it to distribution companies, with government support covering some tariff shortfalls.

He advocated greater use of bilateral agreements between power producers and distribution companies, arguing that direct commercial arrangements could improve payment discipline and reduce dependence on government intervention.

Tegbe also highlighted Nigeria’s underutilised generation capacity, citing the Alaoji power plant, where he said potential output of about 3,000 megawatts compared with roughly 400 megawatts currently being utilised.

The government’s plan combines debt repayment with proposed market reforms intended to improve commercial sustainability, encourage investment and support more reliable electricity supply.

Industry observers will be watching the implementation of the settlement programme and the proposed reforms to determine whether they can improve liquidity and prevent further arrears in the power sector.