FG May Borrow to Settle N4 Trillion Power Sector Debt – Minister Adelabu
The federal government may resort to borrowing to offset a significant portion of the N4 trillion debt owed to electricity generation companies (GenCos), Minister of Power Adebayo Adelabu announced over the weekend.
Speaking at a high-level meeting with the leadership of the Association of Power Generation Companies (APGC), Adelabu said the government is prioritising immediate cash payments while exploring promissory notes to cover the remaining liabilities. The meeting, according to a statement from Bolaji Tunji, Adelabu’s special adviser on strategic communications, was aimed at finding a sustainable solution to the sector’s deepening liquidity crisis.
“We need to pay a substantial amount of the debt in cash,” Adelabu stated. “At the minimum, let us pay a substantial amount, then issue promissory notes for the rest.”
The move comes amid mounting concern over the survival of GenCos, many of which are battling operational constraints due to unpaid invoices, erratic gas supply, and foreign exchange volatility.
Adelabu revealed that the proposed debt resolution strategy would be presented to President Bola Tinubu in an upcoming meeting with GenCos’ leadership. He expressed optimism that the outstanding debts could be cleared within six months, adding, “The federal government is committed to resolving this debt to stabilise the sector and prevent further crisis.”
The gravity of the crisis was underscored by APGC chairman Sani Bello, who warned that the N4 trillion debt has crippled GenCos’ ability to access credit and maintain infrastructure.
“Without urgent intervention, the entire power ecosystem could collapse,” Bello cautioned.
Echoing this sentiment, Kola Adesina, chairman of Egbin Power and First Independent Power Limited, described the situation as a “national emergency.”
“Everything hinges on power — industries, homes, hospitals. We cannot afford to let the sector fail,” he warned.
Joy Ogaji, CEO of APGC, painted a grim picture of operational challenges, citing payment defaults, grid instability, and a devastating naira devaluation — from N157/$1 in 2013 to over N1,600/$1 in 2024 — as major threats to GenCos’ survival.
“GenCos have borne unsustainable risks, from grid failures to unproductive taxes, while remaining patriotic,” Ogaji said.
Adelabu acknowledged the federal government’s part in the sector’s long-standing inefficiencies and pledged comprehensive reforms to ease operational bottlenecks. He called for the full liberalisation of the electricity market and urged Nigerians to embrace cost-reflective tariffs as a path to sustainability.
“Our economy cannot sustain energy subsidies indefinitely,” he said, while assuring that targeted support would remain for economically disadvantaged citizens.
To reposition the sector, Adelabu said the ministry will push regulatory reviews to reduce excessive levies, improve transparency, and restore investor confidence. He also called on GenCos to collaborate with the government on public education campaigns to promote efficient energy consumption and compliance with evolving tariff structures.
