FG Explores Alternative Financing to Address N2 Trillion Power Sector Debt

…Pledges Sustainable Solution to GenCos’ Payment Woes, Eyes State Electricity Market Transition

In a renewed bid to tackle the protracted financial crisis plaguing Nigeria’s power sector, the Federal Government has disclosed that it is actively exploring alternative funding mechanisms to address the estimated ₦2 trillion legacy debt owed to electricity generation companies (GenCos). The announcement was made during the Nigerian Electricity Supply Industry (NESI) Stakeholders Meeting held in Abuja this week.

Representing the Special Adviser to the President on Energy, Eriye Onagoruwa acknowledged the crippling effect of the debt burden on the country’s electricity generation capacity. She emphasized that the administration is aware of the dire financial stress facing GenCos and is working closely with fiscal authorities, including the Coordinating Minister of the Economy and the Debt Management Office, to develop sustainable solutions.

“We are empathetic to what GenCos are facing. Given current fiscal constraints, alternative debt instruments are being explored. Internal approvals are already underway,” Onagoruwa stated, noting that the government aims to strike a delicate balance between fiscal prudence and the urgent need to stabilize the power sector. While she refrained from providing specific timelines, she hinted that concrete updates could be shared by the next NESI meeting.

The outstanding debt has remained one of the biggest impediments to liquidity in Nigeria’s power value chain, undermining investor confidence and threatening the operational viability of GenCos. Stakeholders at the meeting stressed that resolving the funding issue was key to unlocking sustained growth and efficiency in electricity generation and distribution.

Another significant development discussed at the meeting was the ongoing implementation of the Electricity Act 2023, which facilitates the transition to decentralized state electricity markets. So far, eleven states have initiated the process, with Enugu, Ondo, Ekiti, Imo, Oyo, Edo, and Kogi already completing the transition. Stakeholders called for targeted capacity building, clear regulatory frameworks, and investment readiness to ensure smooth implementation across states.

Also highlighted was the Presidential Metering Initiative, a flagship program aimed at closing Nigeria’s wide metering gap and eliminating the controversial practice of estimated billing. Onagoruwa revealed that more than six million meters will be deployed across the country through the initiative, with funding support from the Distribution Sector Recovery Program (DISREP), the Federation Account, and the Meter Asset Fund.

“End users will not pay for the meters. We are deploying first to high-consumption areas, particularly Band A customers. Our approach will also prioritize certified installers and the development of a robust communication infrastructure to ensure accurate billing,” she added.

The full rollout of the metering initiative is expected to begin in Q4 2025, with coordination between electricity distribution companies (DisCos), the Bureau of Public Enterprises (BPE), and the National Power Training Institute of Nigeria (NAPTIN) already in motion.