FG to clear $2.6b power sector debt to end blackouts, attract investment

By : Guardian Nigeria

Date: 14 August 2025 12:10pm WAT

A general view of a power distribution plant which has ran out of power supply following a collapse of the national grid resulting in total blackout in Lagos, Nigeria's commercial capital, on March 15, 2022. From Nigerian airlines to Malawi bakers, African countries are feeling the pain of Ukraine's crisis as supply disruptions hike inflation and oil prices push up fuel costs. Global oil prices touched ten-year highs of more than $100 a barrel soon after Russia invaded Ukraine, doubling diesel prices for African countries like Nigeria. Ukraine and Russia are both major suppliers of wheat and grains to Africa and Western sanctions and disruptions are already hiking costs across the continent. (Photo by PIUS UTOMI EKPEI / AFP) (Photo by PIUS UTOMI EKPEI/AFP via Getty Images)

The Federal Government will begin a phased refinancing of N4 trillion ($2.61 billion) owed to electricity generation companies in the next month, a move the government says will help revive the struggling power sector and improve nationwide supply.

Finance Minister Olawale Edun said Wednesday that President Bola Tinubu approved the debt settlement plan after verification of outstanding invoices dating back to 2015. The bulk of the arrears is owed to 27 generation firms whose unpaid bills have curtailed investment and worsened power outages in Africa’s most populous country.

Implementation, overseen by the Debt Management Office, is expected within three to four weeks and will rely on bond issuances and other financing tools to ease repayment pressure on government coffers.

Officials say the plan is part of a wider reform package that includes subsidy cuts and tariff adjustments, measures projected to save the treasury N1.1 trillion ($718 million) annually while signalling to investors that the government is committed to a commercially viable power market.

The move comes amid chronic electricity shortages that have hampered economic growth, shut down industries, and left millions reliant on costly generators.