FG Begins Settling GenCos' Legacy Debt with ₦333 Billion Payment, Plans ₦729 Billion Bond

The Federal Government has taken another major step toward addressing Nigeria's long-running electricity sector debt crisis by commencing the settlement of verified debts owed to electricity generation companies (GenCos).

As part of the Presidential Power Sector Debt Reduction Programme (PPSDRP), the government has already disbursed about ₦333 billion to eligible GenCos and paid the first coupon on an earlier bond issuance. It is also preparing to issue a second bond worth approximately ₦729 billion to continue clearing legacy debts that have weighed on the power sector for years.

Why the Debt Matters

Nigeria's electricity generation companies have repeatedly complained that unpaid debts have left them struggling to pay gas suppliers, maintain power plants and invest in new generation capacity.

The liquidity crisis has been identified as one of the major obstacles preventing stable electricity supply across the country.

To address the challenge, President Bola Tinubu approved the ₦4 trillion Presidential Power Sector Debt Reduction Programme, designed to settle verified obligations through a structured, market-based financing arrangement.

Fresh ₦729 Billion Bond Planned

According to the Nigerian Bulk Electricity Trading Plc (NBET), the government will soon issue a ₦729 billion Series 2 bond, following the successful ₦501 billion Series 1 bond issued earlier this year.

Combined, the two issuances will total about ₦1.23 trillion, representing the first phase of the broader ₦4 trillion programme.

NBET said the programme is backed by the full faith and credit of the Federal Government and is intended to restore confidence in Nigeria's electricity market.

Government Says Programme Will Strengthen Power Sector

NBET Chief Executive Officer Johnson Akinnawo described the second bond issuance as another milestone in restoring liquidity and attracting investment into the sector.

According to him, settling verified debts will:

• Improve cash flow across the electricity value chain.

• Strengthen the financial position of power companies.

• Encourage fresh investment in electricity generation.

• Support long-term stability in Nigeria's power sector.

Will Nigerians Notice Better Electricity?

While the debt settlement is a positive development, energy experts caution that consumers may not see immediate improvements in electricity supply.

Nigeria's power sector continues to face multiple challenges, including:

• Ageing transmission infrastructure.

• Gas supply constraints.

• Distribution bottlenecks.

• Electricity theft and poor revenue collection.

Analysts say resolving GenCos' debts is only one part of broader reforms needed to deliver more reliable electricity nationwide.

Industry Welcomes the Move

Power sector stakeholders have generally welcomed the government's effort to reduce legacy debts, saying it could help restore investor confidence after years of financial uncertainty.

However, some industry participants have continued to call for greater transparency in the verification and settlement process, as well as sustained reforms to prevent future debt accumulation.

Looking Ahead

The planned ₦729 billion bond is expected to be issued following an investors' forum organised by the government and NBET.

If successfully implemented, officials believe the programme will create a more bankable electricity market capable of attracting private investment, improving power generation and supporting Nigeria's economic growth.