THE Federal Government has promised to pay off a debt of N4 trillion it owes to electricity-generating companies, also known as (GENCOs).
The payment will be made in two ways, part of it in cash, and the rest through promissory notes, which are legal documents that act as a promise to pay money at a later date.
The Minister of Power, Adebayo Adelabu, gave this assurance during a press briefing in Abuja on Thursday, April 17, 2025. He explained that the debt piled up over time because the government helped to cover part of the electricity costs, especially when tariffs were not increased as expected. This was part of the government’s effort to reduce the burden on Nigerians.
“The N4 trillion payments are largely a result of our interventions in tariff payment hikes at certain periods,” he said. “I can assure you that plans are underway to make this payment. We would be making this payment gradually, and the mode of payment is in two ways.”
“First, we have some budgetary provisions which would facilitate cash payments, while we’re also discussing with the GENCOs to give them a guarantee through debt instruments like the promissory notes, which we will give to them to defray the debts,” Adelabu added.
The ICIR reports that the power-generating companies operating in Nigeria have stated that the unpaid N4 trillion debts owed by the companies may lead to an imminent shutdown if the government fails to address the issue.
The GENCOs Board of Trustees Chairman, Sani Bello, has announced the shutdown plans for Monday, April 14.
He stressed that besides owning huge debts, the GenCos are also operating under very harsh monetary and fiscal conditions, occasioned by the economic realities currently facing the country.
In 2024, GENCOs were only able to collect less than 30 per cent of what they were owed, and 2025 is already looking worse. Meanwhile, the 2025 national budget has only N900 billion set aside for paying the debt far short of the N4 trillion owed.
“The 2024 collection rate has dropped below 30 per cent, and 2025 is not any better, severely affecting GenCos’ ability to meet financial obligations.
“High corporate income tax, concession fees, royalty charges, and the new Financial Reporting Council(FRC) compliance obligations are currently straining GenCos revenue,”Bello said in the shutdown notice.
Adelabu assured Nigerians that the government is working with the Minister of Finance, Wale Edun, to find a solution and begin payments soon.
“We had held a meeting with the Minister of Finance and the Coordinating Minister of the Economy,Wale Edun on this and had reached an official understanding on this,” he clarified further.
He also criticised power distribution companies (DisCos) for not investing enough in the power sector, even though they receive government support.
“DisCos are not investing in the sector. They need to invest in the sector and not just milk it. The government is giving them the needed support, and we need to see them invest in the sector more,” he said.
He also urged communities to protect power facilities in their areas, warning that vandalism continues to damage infrastructure and hurt electricity supply.
This is not the first time GENCOs have raised alarm over unpaid debts. The issue has been a major problem for years, making it hard for the power sector to grow and attract new investors.
A report by The ICIR in February also confirmed the federal government’s debt to power-generating companies, which has remained a key challenge as the sector struggles to repay investors in the power sector value chain.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.