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FG has pledged to offset N2 trillion of the N4 trillion debt owed to electricity generation companies (Gencos) by December 2025 to prevent a nationwide blackout.
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Power Minister Adebayo Adelabu said the payment will be through cash and promissory notes, following Gencos’ warning to shut down due to inadequate payments.
The Federal Government says it will settle N2 trillion of its N4 trillion debt to electricity generation companies (Gencos) by the end of 2025, in an urgent effort to avoid a nationwide power shutdown.
Minister of Power, Adebayo Adelabu, made the disclosure on Thursday during the sixth Ministerial Press Briefing Series in Abuja.
He said the payments would be made through a mix of direct cash disbursements and promissory notes designed to be “bankable and liquid,” ensuring Gencos can easily convert them into funds. “We’re working on budgetary releases for cash payment, while promissory notes will be issued simultaneously,” he said.
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This intervention comes after warnings from the Gencos under the Association of Power Generation Companies, who threatened to halt operations over unpaid subsidies and insufficient compensation for energy generated.
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Adelabu explained that nearly half the outstanding debt was inherited, while the rest accumulated in 2024. He attributed the liquidity crisis to Nigeria’s longstanding subsidy structure, noting: “The average cost of generation is N170/kWh, but most customers still pay just N60. That’s a 65% subsidy still in place.”
While recent tariff hikes for Band A customers—who enjoy up to 20 hours of power daily—have helped reduce subsidy pressure by 35%, the minister stressed that the government is now targeting support towards truly low-income users. “We’re not eliminating subsidies but restructuring them… Previously, high-consuming households benefited the most,” he said.
Adelabu also issued a warning to distribution companies (DisCos) over noncompliance with mandated service levels, particularly the 20-hour supply for Band A customers.
“We are not on the side of the companies—we are on the side of Nigerians,” he said, adding that energy reforms had already raised market revenues from N1 trillion in 2023 to N1.7 trillion in 2024. “This shows that financial viability and service delivery can coexist,” he concluded.
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