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. The bonds, approved by President Bola Tinubu and the Federal Executive Council, aim to address long‑standing structural challenges in the power sector and create an environment conducive to private‑sector investment.
The initiative was outlined by the Special Adviser to the President on Energy, Mrs. Olu Verheijen, and was developed during a high‑level meeting that included 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, reaching a consensus to engage in bilateral negotiations that would produce comprehensive settlement agreements sustainable within Nigeria’s fiscal realities and the financial constraints faced by GenCos.
This intervention represents the largest‑scale debt‑resolution effort in over a decade. By eliminating legacy debts that have hindered sector growth, it seeks to strengthen the financial standing of utility companies and improve the reliability of power supply nationwide. The move is a significant step toward restoring financial stability and investor confidence in Nigeria’s electricity market and aligns with President Tinubu’s strategic vision of modernizing electricity infrastructure—enhancing grid systems, expanding distribution networks, and scaling embedded generation—to foster sustainable growth and private investment.
The plan follows an April 2025 warning from GenCos, which threatened to shut down the country’s power sector over N4 trillion in unpaid legacy debts. Settling these debts is expected to enable GenCos to operate more efficiently and increase overall power reliability. Using government‑backed bonds to clear the obligations demonstrates the government’s commitment to tackling power‑sector challenges and creating an attractive environment for private investors. With this development, Nigeria’s power sector is poised for significant improvement, offering far‑reaching benefits for the economy and its citizens.
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