FG Settles N333bn GenCos Debt

Morganable Business/Energy&industry

Nigeria’s power sector has long been burdened by liquidity challenges, with generation companies, distribution firms, and gas suppliers often struggling with unpaid invoices and mounting debts

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The Federal Government on Tuesday announced that it had fulfilled all commitments under the first tranche of its power sector debt financing programme, disclosing that it deployed about N501bn to offset part of the long-standing legacy debts owed to electricity generation companies.

The government said N333bn had so far been paid to eight participating generation companies (GenCos), covering 17 power plants under the first phase of the programme, in what officials described as a major step towards restoring financial stability in Nigeria’s electricity sector.

Speaking at the Nigerian Bulk Electricity Trading Finance Company Plc Series II Bond Issue Investors’ Forum in Abuja, the Special Adviser to President Bola Tinubu on Energy, Olu Verheijen, said the successful execution of the first phase had strengthened investor confidence and laid the groundwork for a new N729bn bond issuance.

According to her, the Tinubu administration deliberately chose to demonstrate credibility by meeting its obligations before returning to the capital market for additional funding.

“Every successful capital market tells the same story-investors return where governments keep their promises,” Verheijen said.

“President Bola Tinubu’s administration has demonstrated, beyond doubt, its commitment to making a clean break from the fiscal dysfunction that once defined Nigeria’s power sector.”she added

FG Aims At Strengthening Liquidity

She explained that the government’s approach goes beyond simply restructuring debts, noting that the programme is designed to convert legacy liabilities into fresh liquidity that can stimulate investments across the electricity value chain.

“We are converting yesterday’s liabilities into today’s liquidity and tomorrow’s investment capacity,” she said.

“That liquidity, if sustained, will strengthen the entire electricity value chain, improve operational performance, and restore confidence across the sector.”she added

Nigeria’s power sector has long been burdened by liquidity challenges, with generation companies, distribution firms, and gas suppliers often struggling with unpaid invoices and mounting debts.

These challenges have constrained investment and undermined efforts to deliver stable electricity supply across the country.

Reforms Prioritize Fiscal Transparency And Private Sector Participation

Verheijen noted that the current reforms are being implemented under the government’s broader economic agenda, which prioritises fiscal discipline, transparency, and private sector participation.

“Markets do not reward promises-they reward performance,” she added. “That is why we deliberately chose execution before expansion.”

Providing details of the first bond issuance, she revealed that the Federal Government injected approximately N501bn into the settlement programme in February 2026.

This included N300bn in cash payments and N201bn through non-cash bond instruments.

According to her, the amount addressed about 22 per cent of the total settlement obligations under executed agreements with stakeholders, with the balance expected to be covered through the upcoming Series II bond and subsequent issuances.

“To date, N333bn has been settled to eight participating generation companies, covering 17 power plants, and they have executed participation agreements,” Verheijen said.

She also disclosed that the government had met its first debt servicing obligation under the programme, paying the initial bond coupon on schedule.

“The first Series I coupon, about N63.5bn, was paid in full on July 14, 2026,” she said, commending the Debt Management Office for its role in ensuring timely payment.

Industry analysts say the prompt servicing of the debt is critical in rebuilding trust among investors, many of whom have been wary of Nigeria’s power sector due to historical inconsistencies in payments and policy implementation.

Verheijen stressed that credibility is central to attracting private capital, noting that governments seeking investment must first demonstrate their own commitment to honouring agreements.

“In sovereign finance, trust compounds just as powerfully as interest does,” she said. “Governments that expect private capital to invest must also demonstrate that their commitments will be honoured. That is exactly what this programme has done.”

She added that early signs of improvement are already emerging within the electricity industry, as participating generation companies are beginning to meet their financial obligations more consistently.

“Participating GenCos are now meeting their gas obligations. Lenders and operation and maintenance contracts that had previously gone unmet are now being honoured,” she said.

She attributed the strong investor participation recorded during the first phase of the programme to growing confidence in both the initiative and the government’s broader reform agenda.

Looking ahead, Verheijen said the forthcoming Series II bond issuance would scale up the gains achieved so far by extending the settlement of verified legacy debts and improving liquidity across the sector.

“Series I has proved the model, and Series II is going to scale it,” she said. “This issuance extends the settlement of verified obligations and deepens liquidity through the electricity value chain. It further strengthens the financial foundations needed to attract long-term capital into the power sector.”

She urged investors to view the bond not only as a financial instrument but also as an opportunity to support Nigeria’s economic transformation.

“By participating, you are investing in a reform programme designed to restore payment discipline, strengthen cash flows, crowd in private capital, and accelerate Nigeria’s economic growth,” she said.

Improving Electricity Remains Critical To National Development

Verheijen emphasised that improving electricity supply remains critical to national development, noting that reliable power has far-reaching impacts on education, small businesses, and industrial productivity.

“This programme is not only about balance sheets or capital markets,” she said.

“It is about the student who gains another hour to study because electricity is reliable. It is about the small business owner who no longer depends on expensive diesel to remain open. It is about the manufacturer whose competitiveness improves because power becomes more dependable and affordable.”she added

Stakeholders in the sector have welcomed the development, describing it as a necessary intervention to resolve longstanding financial bottlenecks that have hindered growth.

However, experts caution that sustained policy consistency, improved governance, and continued investment will be required to fully stabilise the sector and ensure that the benefits of the reforms translate into improved electricity supply for Nigerians.

With the planned launch of the Series II bond, the Federal Government appears poised to build on the initial momentum, as it seeks to unlock further capital and drive long-term transformation in the country’s power industry.