Nigeria has given the green light to a debt refinancing package worth 4 trillion naira ($2.6 billion) aimed at easing the financial strain in its troubled electricity sector.

Finance Minister Olawale Edun announced the approval after Wednesday’s federal cabinet meeting in Abuja, saying the programme will be rolled out within the next month under the supervision of the Debt Management Office.

The bulk of the liabilities—owed to 27 electricity generation companies for unpaid invoices dating back to 2015—has long discouraged new investments and worsened the country’s persistent power shortages.

President Bola Tinubu, who earlier ordered a verification of the claims, endorsed the refinancing move as part of wider efforts to stabilise the grid and improve electricity supply for millions of Nigerians.

The repayment is expected to be spread out through bond issuances and other financial instruments, allowing the government to manage its obligations over time.

The plan dovetails with recent reforms in the energy sector, including subsidy cuts and tariff adjustments, which the government says could save over one trillion naira annually.

By clearing these debts, authorities hope to restore confidence among power producers and attract fresh investment into an industry seen as vital for Nigeria’s economic growth.