Power producers lament unpaid debts amid N501bn bond initiative

n n

Three months after the Federal Government issued a N501bn bond to kick-start the settlement of longstanding electricity debts, power generation companies have yet to receive any payment, raising fresh concerns over liquidity in Nigeria’s fragile power sector.

n

The development comes despite the government’s announcement of the Presidential Power Sector Debt Reduction Programme aimed at clearing an estimated N4tn owed to GenCos for electricity supplied to the national grid over the past decade.

n

Findings by The PUNCH showed that although five generation companies had signed settlement agreements under the programme in January 2026, the disbursement of funds to beneficiaries had not commenced as of Sunday.

n

The five power generation companies are among the over 20 GenCos operating within Nigeria’s electricity market.

n

The Executive Secretary of the Association of Power Generation Companies, Joy Ogaji, confirmed the delay in a chat with our correspondent on Sunday, noting that industry players were still awaiting the actual flow of funds.

n

She said, “Only five GenCos signed. As of today, I asked one of the assignees, and they said no payment has been received.” Her remarks underscore growing anxiety within the Nigerian Electricity Supply Industry, where stakeholders had hoped that the bond issuance would immediately ease the severe cash crunch facing operators.

n

The Federal Government had, in December, issued the N501bn bond in Lagos as part of broader efforts to restore financial stability to the sector. The instrument, which recorded 100 per cent subscription, attracted strong interest from pension funds, banks, asset managers, and other institutional investors.

n

Officials had described the full subscription as a sign of renewed investor confidence in the government’s reform agenda and its willingness to address legacy challenges in the power sector.

n

However, despite the successful fundraising, the delay in disbursement is now raising questions about the pace of implementation of the programme and the government’s ability to translate policy commitments into tangible relief for operators.

n

The Special Adviser to the President on Energy, Olu Verheijen, at the signing ceremony, said the bond issuance marked a decisive reset of the electricity market, combining debt resolution with broader financial and structural reforms aimed at restoring confidence and long-term financial sustainability to the sector.

n

She explained that the inaugural Series 1 Power Sector Bond issuance, executed by NBET Finance Company Plc, closed at N501bn, comprising N300bn raised from the capital market and N201bn allotted in bonds to participating power generation companies.

n

Verheijen said under the programme, verified receivables for electricity supplied between February 2015 and March 2025 were being settled through negotiated agreements with power generation companies.

n

She disclosed that five generation companies operating 14 power plants nationwide—First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and the Niger Delta Power Holding Company Limited—have executed settlement agreements with the Nigerian Bulk Electricity Trading Plc.

n

According to her, the total negotiated settlement value for the five companies stands at N827.16bn and will be paid in four phased instalments. The continued delay could further strain GenCos, many of which are already grappling with mounting operational costs, foreign exchange volatility, and gas supply constraints.

n

The power generation companies have repeatedly complained that the accumulation of unpaid invoices has weakened their balance sheets, limited their capacity to maintain infrastructure, and discouraged fresh investment in the sector.

n

The N4tn debt, largely arising from tariff shortfalls and market inefficiencies, has been a major bottleneck in Nigeria’s electricity value chain, affecting not only generation but also transmission and distribution segments.

n

Under the debt reduction programme, the Federal Government had pledged to clear a substantial portion of the arrears through a combination of bond issuances and structured payments to improve service delivery across the sector.

n

Efforts to get an official response from the office of the Special Adviser to the President on Energy on the delay were unsuccessful as of the time of filing this report.

n

The latest development highlights the persistent structural challenges in Nigeria’s power sector, even as authorities continue to roll out reforms aimed at repositioning the industry for sustainable growth.

n n