By Kelechi Onwujuba

The Federal Government has paid N333 billion to eight electricity generation companies (GenCos) operating 17 power plants as part of its ongoing initiative to clear longstanding debts in Nigeria's power sector.


In addition, the government has launched the second phase of its debt settlement programme through a bond issuance valued at approximately N729 billion, aimed at offsetting verified legacy obligations owed to power generation companies.


The intervention is expected to improve liquidity across the electricity value chain, strengthen power generation, and rebuild investor confidence in Nigeria's electricity market.


Speaking at the Nigerian Bulk Electricity Trading (NBET) Finance Company Plc Series II Bond Issue Investors' Forum in Abuja on Tuesday, the Special Adviser to the President on Energy, Olu Verheijen, said the Tinubu administration was committed to addressing the financial challenges that have long affected the power sector.


She explained that the government's strategy is designed to transform inherited financial liabilities into sustainable investment opportunities while creating a more reliable and bankable electricity market.

According to Verheijen, the Presidential Power Sector Financial Reforms Programme under the Renewed Hope Agenda is focused on restoring liquidity, improving operational efficiency, and rebuilding confidence throughout the electricity value chain.


She disclosed that the first phase of the programme, implemented in February 2026, involved the disbursement of about N501 billion, comprising N300 billion in cash and N201 billion through non-cash bond instruments. The package addressed roughly 22 per cent of the settlement obligations under executed agreements, with the remaining debts to be settled through the second and subsequent bond issuances.


"So far, N333 billion has been paid to eight participating generation companies covering 17 power plants after the execution of participation agreements. The government has also fulfilled its obligations on schedule, including the payment of the first Series I bond coupon on July 14, 2026," she said.


Verheijen noted that the prompt fulfilment of government obligations has strengthened confidence among investors and industry stakeholders. She added that participating GenCos are now better positioned to meet gas supply commitments, service outstanding obligations to lenders, and fund operation and maintenance activities that were previously constrained by liquidity shortages.


She stressed that governments seeking private investment must demonstrate credibility by honouring contractual obligations and maintaining predictable policies, saying such actions are essential for attracting long-term capital into the electricity sector.


On the newly launched Series II bond, Verheijen said it would expand the settlement of verified legacy debts while reinforcing the financial stability of the electricity industry.


She described the bond as more than a financial instrument, noting that investors would be supporting reforms aimed at restoring payment discipline, strengthening cash flows, attracting private investment, and accelerating Nigeria's economic development.


Also speaking, the Acting Managing Director and Chief Executive Officer of the Nigerian Bulk Electricity Trading Plc, Johnson Akinnawo, said the success of the Series I issuance had demonstrated that Nigeria's power sector debt could be resolved through transparent capital market instruments.


According to him, the first bond issue was introduced to test whether legacy debts that had remained on the books of generation companies for years could be addressed through credible financing mechanisms rather than repeated assurances.


He said investors responded positively to the N501 billion Series I issuance, while the Federal Government fulfilled both coupon and principal repayments when they became due on July 14, 2026.


Akinnawo expressed confidence that the approximately N729 billion Series II bond would build on the achievements of the first issuance while maintaining the same level of discipline and transparency.


Meanwhile, the Minister of Power, Joseph Tegbe, described the resolution of the electricity sector's liquidity crisis as essential to improving power supply and supporting Nigeria's economic growth.


He said the debt settlement programme goes beyond raising funds, describing it as a major reform intended to restore the commercial viability of the country's electricity market.


Tegbe called on pension fund administrators, insurance companies, banks and other institutional investors to participate in the bond programme, saying it offers an opportunity to partner with the Federal Government in strengthening Africa's largest electricity market.


He added that the ultimate objective is to build a financially sustainable, investment-driven electricity sector capable of supporting Nigeria's industrialisation and long-term economic transformation.