FG Launches N4tn Power Debt Settlement, Five GenCos Sign On

In a major move to address Nigeria’s lingering power sector debt, the Federal Government has commenced the settlement of an estimated N4tn liability with the signing of agreements with five power generation companies.

The action follows the successful issuance of a N501bn bond, which was fully subscribed by institutional investors including pension funds and banks, signalling market confidence in the government’s reform plan.

Dubbed the Presidential Power Sector Debt Reduction Programme, the initiative aims to clear legacy payment arrears owed to Generation Companies (GenCos) for electricity supplied since 2015. These debts have long crippled liquidity and discouraged investment in the sector.

At a signing ceremony on Tuesday, the Managing Director of the Nigeria Bulk Electricity Trading Plc (NBET), Johnson Akinnawo, described the programme as a “historic and defining moment,” made possible by the approval of President Bola Tinubu and the Federal Executive Council.

The Special Adviser to the President on Energy, Olu Verheijen, explained that the first phase involves a N501bn bond issuance. The proceeds will fund partial settlement of verified receivables owed to five GenCos: First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and the Niger Delta Power Holding Company Limited.

These companies, operating 14 power plants nationally, have signed agreements for a total negotiated settlement of N827.16bn, to be paid in phased instalments. The bond will cover the first two instalments, worth approximately N421.42bn.

Industry operators welcomed the development. Kola Adesina, Group Managing Director of Sahara Power Group, stated that resolving the debts restores confidence and will enable immediate reinvestment, such as the expansion of the Egbin Power Plant.

Officials highlighted that clearing the arrears is expected to improve GenCos’ liquidity, allowing them to meet operational costs and service their own debts, thereby unlocking further investment across the electricity value chain.

The Minister of Finance, Wale Edun, whose remarks were delivered by the Director-General of the Debt Management Office, called the bond issuance a “critical turning point” for the sector, demonstrating the government’s commitment to using innovative finance to solve structural challenges.