GenCos Reject FG’s N3.3tr Debt Settlement, Demand Over N4tr Payment

By Johnson Emmanuel

The Association of Power Generation Companies (APGC), representing electricity generation companies (GenCos), has disputed the federal government’s claim that implementation of the approved power sector debt settlement has commenced. Speaking during an industry webinar, Joy Ogaji, Chief Executive Officer (CEO) of the Association of Power Generation Companies, stated that most generation companies have not received any payment from the approximately N3.3 trillion debt settlement approved by President Bola Tinubu under the Presidential Power Sector Financial Reforms Programme.

Ogaji further rejected the federal government’s revised debt figure, insisting that liabilities owed to generation companies exceed N4 trillion and that the broader debt burden has continued to grow.

“To date, we have not received a dime. Nothing has been received by the GenCos,” Ogaji said.

DECISION HIGHLIGHT

The dispute is no longer merely about payment timing. It has evolved into a disagreement over debt recognition, settlement methodology and sector solvency.

While the federal government has recognised approximately N3.3 trillion as a final settlement figure following verification exercises, generation companies insist that the actual obligation remains significantly higher.

“We have not accepted N3.3 trillion; the GenCos have not accepted it because when we reconciled our debt to the gas suppliers, we owed them over N4 trillion,” Ogaji stated.

The disagreement directly affects the credibility and effectiveness of ongoing power sector financial reforms.

DECISION MEMO

The latest disagreement exposes a deeper structural challenge within Nigeria’s electricity value chain: the persistent disconnect between acknowledged liabilities and cash settlement.

The federal government’s reform strategy appears designed to reduce legacy obligations through negotiated settlements and bond-financed repayments. However, the position of generation companies suggests that recognition of debt has not yet translated into meaningful liquidity across the sector.

Gencos operate at the centre of a chain linking gas suppliers, generation assets, transmission infrastructure and electricity distribution companies. Unresolved receivables weaken their ability to meet obligations to upstream suppliers, particularly gas producers.

Ogaji’s comments indicate that the debt dispute has extended beyond government and generators to include gas suppliers whose receivables remain exposed.

“We also engaged the gas suppliers to tell them that the government was proposing to remove 50 percent of what we are requesting,” she said. “The gasCos said they didn’t have any contract with the government, but we continue to owe them to the last dime, and they are not going to concede to even one naira.”

The emerging picture is that of a sector attempting financial restructuring while simultaneously carrying legacy obligations that continue to compound.

Equally significant is the fragmentation within the generation segment itself. According to Ogaji, only five generation companies accepted the terms attached to the Federal Government’s earlier bond settlement framework, suggesting uneven confidence in the proposed resolution mechanism.

The dispute therefore highlights a broader policy challenge: whether financial restructuring can restore sector confidence without full consensus among critical market participants.

DATA BOX

• Federal Government recognised debt: Approximately N3.3 trillion
• GenCos’ claimed outstanding debt: More than N4 trillion
• Industry debt estimate cited by APGC: More than N7 trillion and rising
• Federal Government bond already raised: Approximately N500 billion
• Settlement agreements signed: Five generation companies
• Power plants covered by agreements: Fourteen
• Agreed settlement value for five companies: Approximately N827.16 billion
• Instalment structure: Four payments
• Participating companies: First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited and Niger Delta Power Holding Company Limited

WHO WINS / WHO LOSES

Winners

• Generation companies that accepted bond-backed settlements and have begun accessing payments.
• Power sector reform advocates if settlements ultimately restore liquidity.
• Financial institutions participating in power-sector restructuring instruments.

Losers

• Generation companies yet to receive payments.
• Gas suppliers carrying growing receivables exposure.
• Electricity consumers if financial stress constrains future investment.
• The broader economy if power-sector liquidity challenges persist.

POLICY SIGNALS

The development signals that power-sector reform is entering a more difficult implementation phase.

While the federal government has demonstrated willingness to acknowledge legacy obligations, execution risk remains substantial. The disagreement suggests future reforms may require stronger reconciliation frameworks, improved stakeholder alignment and clearer settlement timelines.

The episode also underscores the growing importance of financial engineering, including bonds and negotiated settlements, in addressing structural sector liabilities.

INVESTOR SIGNAL

The dispute reinforces a longstanding investor concern within Nigeria’s electricity market: payment certainty.

Investors generally view debt recognition positively, but delayed disbursement and disagreements over liability size may weaken confidence in future cash-flow projections.

The fact that only a limited number of generation companies accepted earlier settlement terms suggests varying assessments of recovery prospects across the sector.

For prospective investors, implementation credibility may now matter more than policy announcements.

RISK RADAR

The principal risk is liquidity contagion across the electricity value chain.

If generation companies remain unable to recover receivables, pressure may intensify on gas suppliers, infrastructure maintenance and future generation capacity investments.

A second risk is debt accumulation. Ogaji argued that liabilities have continued to grow despite ongoing reform efforts.

“Nothing has been done about the N3.3 trillion or the N6.8 trillion, which has now ballooned to over N7 trillion, and still growing,” she said.

A third risk is stakeholder fragmentation. The divergence between government calculations, generation company claims and gas supplier expectations could complicate future settlement negotiations.