President Bola Tinubu has cut the electricity subsidy bill claimed by power generation companies from N6tn to N2.8tn, approving only the audited amount as the Federal Government’s verified legacy debt to the firms.
President Bola Tinubu has approved the payment of N2.8tn to power generation companies (GenCos) as the Federal Government’s verified liability for accumulated electricity subsidies dating back over a decade. The decision followed months of negotiations and a tripartite audit involving the Ministry of Finance, the Nigerian Bulk Electricity Trading Plc and the GenCos, which substantially reduced the operators’ initial N6tn claim.
Presidency and power ministry officials disclosed that Tinubu insisted public funds would only be released based on audited figures, describing the higher figures earlier submitted by the GenCos as inflated. To demonstrate commitment while the audit was still ongoing, the Federal Government in January raised about N501bn through a bond under the Presidential Power Sector Debt Reduction Programme, which has since been disbursed as part of the settlement.
Under the new arrangement, additional tranches estimated between N600bn and N800bn are expected to be released by mid-year, bringing total payments to roughly half of the N2.8tn liability before the remaining balance is spread over the following 12 to 24 months. A significant portion of the funds is to be ring-fenced for the settlement of GenCos’ outstanding gas bills, a move the Presidency believes will ease recurring grid instability linked to poor gas supply.
Officials said the move is aimed at restoring liquidity in the power sector, clearing critical debts to gas suppliers and compelling the generation companies to reinvest in infrastructure to improve electricity supply. The decision comes amid criticism from labour groups and consumer advocates over repeated bailouts of private operators, even as Nigerians continue to battle erratic supply and rising tariffs.
