President Bola Ahmed Tinubu has approved a reduction in the power generation companies’ (GenCos) verified debt claim from about N6 trillion to N2.8 trillion, directing that the Federal Government will only pay the audited amount as its liability for outstanding sector obligations, officials say.

The announcement follows months of negotiations and a tripartite audit involving the Federal Ministry of Finance, the Ministry of Power and the Nigerian Bulk Electricity Trading Plc (NBET) with the GenCos themselves. The audit was ordered by the president to scrutinise the legacy debt claims dating back over a decade and to prevent inflated figures from becoming a drain on public finances.

In conversations with government sources, a senior official said the GenCos initially submitted a claim approaching N6 trillion, which the president rejected as excessive and insisted on a verified audit before any payment. The audited figure of N2.8 trillion now represents the total amount the government will recognise and settle.

As a gesture of good faith during negotiations, the Federal Government had earlier raised a N501 billion bond under the Presidential Power Sector Debt Reduction Programme, which has already been partly disbursed to address liquidity challenges in the sector. Additional payments are expected between May and July this year, with plans to spread the payments of the remaining balance over the next 12 to 24 months.

The phased settlement agreement signed with five GenCos covers a portion of the total liability and lays out conditions that require part of the proceeds be used to settle the companies’ outstanding gas supply debts, a factor cited by operators as contributing to frequent generation fluctuations when gas deliveries are interrupted.

In structured terms, the government’s decision seeks to balance fiscal responsibility with sustaining the power sector and addressing long-running liquidity issues that have constrained consistent electricity generation. The president’s directive also emphasises accountability by tying payments to clear performance conditions and infrastructure investments by the GenCos.