Powering the Future: FG Approves ₦4 Trillion Debt Refinance to Rescue Nigeria’s Electricity Sector

In a bold and strategic move to revive Nigeria’s ailing power sector, the Federal Government has approved a ₦4 trillion ($2.61 billion) debt refinancing plan targeted at clearing longstanding arrears owed to 27 power generation companies (GenCos). The announcement followed a high-level Federal Executive Council (FEC) meeting presided over by President Bola Ahmed Tinubu, highlighting the administration’s urgency in restoring investor confidence and addressing Nigeria’s perennial power crisis.

Background & Breakdown:

The debt, accumulated between 2015 and 2023, stems from unpaid invoices for electricity supplied to the national grid. These outstanding liabilities have crippled the GenCos' ability to operate efficiently, discouraging further investment and worsening Nigeria’s erratic electricity supply.

To address this, the *Debt Management Office (DMO)* is set to roll out a structured refinancing model within *three to four weeks*, which will likely involve *government-backed bond issuances and financial instruments*. The DMO will collaborate with the *Federal Ministry of Power* and other relevant agencies to ensure timely execution and transparency.

Strategic Benefits:

- Restores liquidity to GenCos and boosts operational capacity  

- Improves investor confidence in the Nigerian power sector  

- Supports broader reforms, including the ongoing subsidy phase-out  

- Estimated to save ₦1.1 trillion annually through tariff reforms and efficiency

This debt refinancing is one of the largest sector bailouts in Nigerian history and forms a central pillar of Tinubu’s energy sector reforms, alongside tariff reviews for urban consumers and a renewed commitment to privatization discipline.