The Presidency has defended the ₦3.3 trillion debt settlement plan approved by Bola Ahmed Tinubu for power generation companies (GenCos), describing it as a structured reform initiative aimed at addressing longstanding financial challenges in Nigeria’s electricity sector, rather than a payout for unverified claims.

In a statement issued on Thursday, the Presidency said the Federal Government is implementing a “structured and balanced reform programme” anchored on a market-based settlement mechanism designed to restore financial stability in the sector. It stressed that the initiative prioritises verified and contract-backed obligations, while safeguarding public interest.

The clarification follows concerns raised by some GenCos over the basis for the ₦3.3 trillion figure, with operators pointing to discrepancies between the approved sum and earlier reconciled industry records.

According to the Presidency, total claims across the electricity value chain accumulated to approximately ₦4.7 trillion between 2015 and 2025. Following a stakeholder meeting in July 2025, President Tinubu directed a comprehensive review of the claims.

Subsequently, the Federal Executive Council approved a fiscal cap of ₦4 trillion on August 15, 2025. A verification process then reduced the claims by about 30 per cent, resulting in a final negotiated settlement of ₦3.3 trillion, representing only validated liabilities.

The government noted that the repayment is being executed through a phased, market-driven financing framework to minimise fiscal pressure. The first tranche of the programme, valued at ₦1.23 trillion, is already underway, with ₦501 billion raised from the domestic capital market.

Of this amount, ₦223 billion has been disbursed to GenCos and gas suppliers, while an additional ₦197 billion is currently being processed, largely for gas-related obligations. The Presidency emphasised that all disbursements are conditional, tied to verified claims, executed settlement agreements, and complete documentation.

Providing an update on implementation, the statement indicated that as of January 8, 2026, five GenCos representing 14 power plants had signed agreements worth ₦827 billion. By March 31, 2026, participation had increased to 17 GenCos covering 17 plants, with agreements valued at ₦2.28 trillion.

The Presidency said the growing participation reflects increasing alignment within the sector, adding that the settlement is being implemented alongside broader electricity market reforms. These include targeted support for vulnerable consumers and tariff adjustments aimed at aligning higher service bands with cost-reflective pricing to encourage investment and improve service delivery.

It added that the programme is intended to restore liquidity, stabilise power generation, and enhance reliability, while repositioning the sector for long-term sustainability.

Reiterating its position, the Presidency stressed that the initiative is not a one-off intervention but part of a comprehensive effort to reset the financial and operational foundations of Nigeria’s power sector.

“The Federal Government remains committed to delivering a stable, reliable, and investable electricity market for the benefit of all Nigerians,” the statement said.