Power generation companies have rejected a new Federal Government proposal that would require them to forfeit half of the money owed to them for electricity supplied to the national grid. The offer, which excludes Azura Power West Africa, asks the companies to accept about ₦2.4 trillion as full settlement for a debt stock that has climbed above ₦5 trillion as of June 2025. Accepting the offer would mean relinquishing all present and future claims tied to the legacy debt.
The proposed settlement follows President Bola Tinubu’s earlier commitment to clear the outstanding obligations through a government-backed bond programme. After the Federal Executive Council approved the plan in August, senior officials met power plant owners to outline the repayment structure. The Nigerian Bulk Electricity Trading Plc (NBET) is expected to transfer its liabilities to a newly created special purpose vehicle, NBET Bond Finance Company Plc, which will issue bonds in phases to generate funds for the settlement.
Industry sources said the generation companies had already rejected the haircut during discussions with the Ministers of Finance and Power and the President’s Special Adviser on Energy. They accused government officials of reintroducing the 50 percent forfeiture into individual contract documents despite earlier objections. According to one operator, the companies had instead recommended two alternatives: immediate payment of ₦2.4 trillion while deferring the balance, or a limited 10 percent reduction on interest charges, with full settlement of delivered energy, capacity charges, deemed capacity and other reconciliations. Each company was reportedly given only five days, from October 16 to October 21, to respond to the offer, and all declined.
Documents prepared by the Presidential Power Sector Debt Reduction Plan Committee show that the government views the proposal as necessary to stabilise the electricity market. The committee stated that disputed or unverified elements of the debt, including some interest and deemed capacity claims, would be waived to create a clean break and rebuild confidence across the value chain. It warned that failure to implement the settlement could deepen financial distress, reduce generation supply, and further discourage private investment.
Energy analyst Lanre Elatuyi described the offer as damaging to investor perception. He said many generation companies are already struggling with liquidity challenges, and cutting their expected payments would make operations and future expansion more difficult. He warned that the approach could signal to investors that cost recovery in Nigeria’s electricity sector is unreliable, potentially increasing financing costs and worsening supply constraints.
