The Nigerian Federal Government has finalized a comprehensive plan to issue N4 trillion in government-backed bonds to settle outstanding debts owed to power generation companies (GenCos) and gas suppliers. This move aims to address the long-standing structural challenges in the country’s power sector and create an environment conducive to private sector investment.
According to the Special Adviser to the President on Energy, Mrs. Olu Verheijen, the bonds are part of an initiative approved by President Bola Tinubu and the Federal Executive Council. The plan was devised during a high-level meeting attended by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, and the Minister of Power, Chief Bayo Adelabu. The meeting focused on reviewing and finalizing settlement modalities, with a consensus to engage in bilateral negotiations to design comprehensive settlement agreements that are sustainable within Nigeria’s fiscal realities and the financial constraints faced by GenCos.
The intervention represents the largest-scale debt resolution effort in over a decade, seeking to eliminate legacy debts that have hindered growth in the sector, strengthen the financial standing of utility companies, and enhance the reliability of power supply nationwide. This development is a significant step towards restoring financial stability and investor confidence within Nigeria’s electricity market.
The initiative aligns with President Tinubu’s strategic vision of modernizing the electricity infrastructure by improving grid systems, expanding distribution networks, and scaling embedded generation. The goal is to create a favorable environment for sustainable growth and private investment. The move follows the April 2025 warning by GenCos, which threatened to shut down the country’s power sector over N4 trillion in unpaid legacy debts.
The settlement of these debts is expected to have a positive impact on the power sector, allowing GenCos to operate more efficiently and increasing the overall reliability of power supply. The use of government-backed bonds to settle the debts demonstrates the government’s commitment to addressing the challenges faced by the power sector and creating an environment that is attractive to private investors. With this development, Nigeria’s power sector is poised for significant improvement, which could have far-reaching benefits for the country’s economy and citizens.