By Onu Okorie

Federal Government has paid about ₦1.23 trillion of outstanding obligations to electricity generation companies GenCos through bonds and plans to clear the remaining legacy debts next year, as it moves to prevent another build-up of arrears that could undermine investment and electricity supply.
Minister of Power, Joseph Tegbe, disclosed this at the Harvard Business School Association of Nigeria, HBSAN Energy Conference in Lagos, where he reaffirmed the government’s commitment to improving electricity supply while protecting vulnerable consumers.
Tegbe said clearing the historical debt was only part of the government’s intervention, stressing that preventing fresh arrears from accumulating would be critical to restoring financial stability across the electricity value chain.
According to him, the Federal Government wants to create a power market in which obligations are settled as they fall due, thereby improving investor confidence and allowing operators to commit additional capital to generation and other segments of the industry.
“About ₦1.23 trillion of the backlog has been paid so far through bonds,” the minister said, adding that the outstanding balance would be cleared next year.
The legacy obligations to GenCos have remained one of the major financial pressures confronting Nigeria’s electricity market, where weaknesses in revenue collection and payments across the value chain have affected the ability of operators to invest and maintain infrastructure.
For generation companies, delayed payments can constrain cash flow needed for plant maintenance, gas purchases and investment in additional capacity.
The government’s latest commitment therefore places attention not only on clearing historical liabilities but also on addressing the conditions that allowed the debts to accumulate.
Tegbe said the ultimate objective was to make Nigeria’s electricity sector more attractive to investment and capable of delivering reliable power to households, businesses and industries.
He also stressed that reforms would take account of vulnerable Nigerians, indicating that improvements in the sector’s commercial sustainability would be pursued alongside measures to protect consumers least able to absorb higher electricity costs.
The minister said the government was working to make fuller use of available electricity generation capacity as part of efforts to improve supply.
This is significant because increasing installed generation capacity alone does not guarantee electricity at homes and factories unless the transmission and distribution networks can evacuate, deliver and commercially account for the power produced.
The government believes that resolving outstanding obligations to GenCos, preventing fresh arrears and improving utilisation of existing generation capacity could strengthen the industry’s finances and create room for new private investment.
Tegbe said the interventions reflected President Bola Ahmed Tinubu administration’s objective of building a more stable and investment-ready electricity market under the Renewed Hope Agenda.
The success of the initiative, however, will ultimately be measured beyond the settlement of legacy debts. Its bigger test will be whether the government can establish a payment structure that prevents another cycle of unpaid electricity bills while translating improved sector liquidity into more reliable supply for Nigerian consumers.