In this piece, Rotimi Ijikanmi writes that Nigeria’s power sector is beginning to witness tangible progress under the President Bola Tinubu’s administration, as reforms aimed at resolving longstanding liquidity challenges, expanding metering, improving tariff structures and attracting private investment gather momentum.
For decades, Nigeria’s electricity sector represented one of the country’s greatest paradoxes.
Despite vast gas reserves and enormous generation potential, millions of households and businesses grappled with inadequate supply, estimated billing, mounting sector debts and chronic underinvestment.
Today, however, emerging indicators suggest that reforms introduced by President Bola Tinubu’s administration are beginning to change the narrative.
At the heart of the administration’s strategy are the Presidential Power Sector Debt Reduction Programme (PPSDRP) and the Presidential Metering Initiative (PMI).
The two interventions were designed to restore financial viability, improve consumer confidence and create the conditions for sustainable investment across the electricity value chain.
The significance of these reforms was highlighted by Special Adviser to the President on Oil and Gas, Ms Olu Verheeijen, during the Nigerian-British Chamber of Commerce Energy Day 2026 in Lagos.
According to her, the Tinubu administration inherited an energy sector that possessed enormous potential but lacked the structures needed to translate resources into national prosperity.
“Nigeria has never lacked potential. We have oil. We have gas. We have sunlight, water, land, talent and skill. What we have lacked is conversion, that is, the discipline to turn resources into results,” she said.
Verheijen explained that the administration’s overarching objective is to move Nigeria’s energy sector “from promise to performance,” stressing that energy reform remains inseparable from economic reform.
She noted that reliable energy lowers production costs, supports industrial growth, strengthens the Naira and creates jobs.
One of the administration’s most notable achievements has been addressing the longstanding liquidity crisis that crippled the gas-to-power value chain.
For years, generation companies and gas suppliers accumulated huge unpaid obligations, limiting their ability to invest in infrastructure and expand capacity.
To tackle this challenge, the Federal Executive Council approved the PPSDRP, a bond programme valued at up to N4 trillion to settle verified arrears owed to generation and gas companies.
The initiative seeks to restore financial confidence while improving payment discipline throughout the sector.
The programme recorded a major milestone in the fourth quarter of 2025 with the successful issuance of a N501 billion Series 1 bond.
The bond was oversubscribed, demonstrating strong investor confidence in the administration’s reform agenda and in the future prospects of the power sector.
Momentum continued in the first quarter of 2026 when payments of verified claims to GenCos and GasCos commenced.
The move re-assured investors and operators that government was committed to honouring outstanding obligations and restoring credibility to the sector.
When the implementation framework for the debt reduction plan was being finalised in 2025, Mr. Tony Elumelu, Chairman of Heirs Holdings and Transcorp Power described it as a “bold and transformative step”.
He added: “For the first time in years, we are seeing a credible and systematic effort by government to tackle the root liquidity challenges in the power sector.”
Following the successful issuance of the N501 billion Series 1 bond, Mr. Kola Adesina, Group Managing Director of Sahara Power Group, which owns five power plants, praised “President Bola Tinubu’s commitment in resolving the legacy issues”.
Adesina pledged the company’s commitment to scaling up investment in plant expansion, starting with the planned second phase of Egbin Power Station, Nigeria’s largest power generating plant.
By the second quarter of 2026, another major breakthrough had been achieved – Nigeria’s generation companies signed full and final settlement agreements worth approximately N2.28 trillion under the debt reduction programme.
Industry stakeholders describe the development as one of the most significant debt resolution efforts ever undertaken in the nation’s electricity industry.
Verheijen described the initiative as a deliberate effort to reset the sector’s finances and encourage fresh investment.
“This is not a bailout. It is a strategic reset – one that clears verified arrears, restores liquidity, and gives operators the footing to invest with confidence. Government obligations must be honoured, if private capital is to return,” she said.
Analysts believe the debt resolution programme is already strengthening investor confidence by improving cash flow and reducing uncertainty within the gas-to-power chain.
They argue that financially healthier operators are better positioned to invest in generation assets, gas supply infrastructure and network expansion.
Alongside debt resolution, the administration has intensified efforts to close Nigeria’s metering gap through the Presidential Metering Initiative.
The programme was established to eliminate estimated billing, improve transparency and rebuild public confidence in electricity billing system and the results are becoming increasingly visible.
According to the Nigerian Electricity Regulatory Commission (NERC), Nigeria crossed the seven million installed meters mark in January 2026 after ending 2025 with approximately 6.9 million installed meters.
The achievement represents a significant milestone in the country’s journey toward universal metering.
The administration has also accelerated meter deployment nationwide.
Since 2025, more than one million meters have been delivered and are being installed across the country. The rollout is expected to significantly reduce estimated billing while improving revenue collection and accountability.
Verheijen underscored the importance of metering to electricity sector reform, noting that sustainable investment depends on transparent and efficient commercial systems.
“Metering protects consumers, reduces estimated billing, and builds the commercial discipline investment requires,” she stated.
Beyond increasing meter availability, the PMI is supporting local manufacturing and skills development.
In line with President Tinubu’s Nigeria First policy, local meter procurement commenced in the first quarter of 2026 through a transparent bidding process aimed at encouraging domestic assembly and supply.
The initiative is expected to stimulate local industry, strengthen supply chains and create employment opportunities.
Industry experts note that greater local participation will reduce dependence on imports while supporting technology transfer and industrial growth.
Further gains are expected in the third quarter of 2026 with the launch of PMI-Install, a programme designed to train and certify 5,000 meter installers nationwide.
The capacity-building initiative will help accelerate meter deployment while creating technical jobs for young Nigerians; serving as a critical skills entryway into the electricity industry.
Another critical component of the administration’s reform agenda is tariff optimisation. For years, electricity tariffs remained disconnected from service realities, creating distortions that weakened sector finances and discouraged investment.
To address this challenge, the government adopted a phased and pragmatic approach.
By the second quarter of 2026, about 45 per cent of Nigeria’s electricity market had transitioned to cost-reflective tariffs linked directly to service quality.
The reform aims to ensure that customers receiving higher levels of service pay tariffs that reflect actual costs while vulnerable consumers continue to receive targeted support.
Stakeholders say this approach balances commercial sustainability with social protection and the fiscal impact has been substantial.
Available industry projections indicate that the electricity subsidy burden for 2026 has declined by more than N1 trillion. This reduction frees resources for other developmental priorities while improving sector sustainability.
According to Verheijen, tariff reform is being implemented carefully to preserve both affordability and investment attractiveness.
She noted that the subsidised segment is being redesigned to better protect vulnerable households while reducing the fiscal pressures associated with blanket subsidies.
The broader energy reforms undertaken by the administration are also creating favourable conditions for electricity sector growth. Increased gas production and improved investor confidence are strengthening the foundations needed for reliable power supply.
Verheijen observed that Nigeria’s proven gas reserves now exceed 215 trillion cubic feet, while gross gas production has risen significantly since 2023.
She, however, stressed that production alone is not enough.
“For Nigeria, gas is not merely a transition fuel. It is a development fuel,” she said.
The Special Adviser explained that gas remains central to power generation, industrialisation, fertiliser production, petrochemicals and manufacturing.
She further emphasised that the administration’s goal is to transform natural resources into tangible economic value.
“The goal is not simply to produce more gas. It is to ensure Nigerian gas becomes Nigerian power, Nigerian products, Nigerian jobs and Nigerian exports,” she said.
That philosophy increasingly defines the administration’s approach to electricity reform.
Rather than focusing solely on infrastructure expansion, policymakers are pursuing measures that improve financial sustainability, operational efficiency and long-term investment attractiveness.
Verheijen summed up the broader significance of the reforms by reminding stakeholders that electricity affects every aspect of economic life.
“When we speak of energy reform, we are not speaking only of power plants or investors.
We are speaking of the price of food, the cost of transport, the survival of small businesses, the strength of the Naira and jobs for young Nigerians,” she said.
The administration’s achievements so far suggest that foundational reforms are gradually translating into measurable outcomes.
The settlement of N2.28 trillion in sector arrears, the successful bond issuance, the crossing of seven million installed meters and the expansion of cost-reflective tariffs all point to a sector moving steadily toward greater stability.
While challenges remain, stakeholders agree that the direction of travel is becoming clearer.
As Verheijen noted, “Nigeria is no longer presenting potential alone. We are presenting a reform pathway, a project pipeline, and evidence that disciplined execution changes outcomes.”
No doubt, the reforms are translating policy into measurable progress, with debt resolution, expanded metering and tariff rationalisation laying the groundwork for a more viable electricity market.
If sustained, the current momentum could finally move Nigeria’s power sector from decades of unmet potential toward reliable electricity, stronger investment and broader economic growth.
-Ijikanmi writes from Abuja
