Manny Ita –
Controversy is mounting in Nigeria’s power sector following the Federal Government’s approval of a ₦3.3 trillion legacy debt settlement for electricity generation companies (GenCos), a move authorities have described as critical to reviving the industry.
The debt, accumulated over several years, is owed to GenCos for electricity generated and supplied to the national grid but not fully paid for due to liquidity challenges within the power value chain. Major beneficiaries are expected to include key operators such as Transcorp Power and Egbin Power Plc.
Government officials have defended the decision, describing it as a “national rebirth” initiative aimed at restoring confidence in the power sector, improving generation capacity, and stabilising electricity supply across the country. They argue that clearing the debt backlog will enable GenCos to meet operational costs, service loans, and invest in infrastructure upgrades.
However, the Association of Power Generation Companies (APGC) has expressed reservations over the process, particularly questioning the verification parameters used to arrive at the ₦3.3 trillion figure. The group is seeking greater clarity on how the debts were calculated and validated before approval.
Consumer rights organisations have also criticised the move, warning that a lack of transparency could undermine public trust and potentially shift financial burdens onto electricity consumers through higher tariffs or indirect subsidies.
Industry analysts note that while settling legacy debts is necessary to address longstanding liquidity constraints, the absence of clear auditing, independent verification, and public disclosure mechanisms raises concerns about accountability in the disbursement process.
The Nigerian power sector has struggled with persistent challenges since its privatisation, including inadequate generation capacity, transmission bottlenecks, and poor revenue collection, all of which have contributed to the accumulation of unpaid obligations.
Stakeholders are now calling for a comprehensive reform framework, including stronger regulatory oversight, cost-reflective tariffs, and improved market discipline, to ensure that the bailout delivers sustainable improvements rather than temporary relief.
As debate continues, the development has placed renewed focus on the need for transparency, efficiency, and long-term structural reforms in Nigeria’s electricity industry.
