FG Rebuilds Power Market Credibility Through Structured Debt Repayment

By Olumide Johnson

The federal government has paid about N333 billion to eight electricity generation companies (GenCos) covering 17 power plants and launched a N729 billion second bond issuance under the Presidential Power Sector Debt Reduction Programme. Speaking at an investors’ forum organised by Nigerian Bulk Electricity Trading Plc (NBET) in Abuja, Mrs. Olu Verheijen, Special Adviser to the President on Energy, disclosed that the programme began in February 2026 with N501 billion, comprising N300 billion in cash and N201 billion in bond instruments. Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele, said that the Federal Executive Council (FEC) approved a N4 trillion debt reduction initiative, while liability verification reduced recognised obligations to about N3.3 trillion. The first coupon payment of N63.5 billion on the seven-year bond was completed on 14 July 2026.

DECISION HIGHLIGHT

The government is shifting power sector reform from debt recognition to debt resolution, using capital market instruments to restore liquidity and investor confidence.

DECISION MEMO

The latest bond issuance represents more than a financing exercise; it is an attempt to rebuild commercial confidence across Nigeria’s electricity value chain.

Years of unpaid obligations weakened the financial position of electricity generation companies, constrained payments to gas suppliers and discouraged fresh investment. By combining direct cash payments with tradable debt instruments, the government is seeking to restore payment discipline without placing immediate pressure on public finances.

Verheijen framed the programme as a credibility exercise rather than simply a fiscal intervention.

“Markets do not reward promises; they reward performance. Capital follows credibility.”

The successful payment of the first N63.5 billion coupon strengthens that narrative by demonstrating execution rather than commitment alone.

Similarly, Oyedele argued that rigorous verification reduced outstanding claims from over N4 trillion to approximately N3.3 trillion, improving the integrity of the repayment programme. He added: “Investors do not reward intentions; they reward execution. Every commitment honoured today reduces the cost of capital tomorrow.”

Minister of Power, Mr Joseph Tegbe, described the initiative as a structural reform designed to restore the financial health of Nigeria’s electricity market, while encouraging long-term institutional investors to participate.

The programme’s significance therefore extends beyond settling legacy debts. It seeks to re-establish confidence that contractual obligations in Nigeria’s power market will be honoured, thereby improving the sector’s ability to attract long-term private capital.

DATA BOX

• Cash paid to GenCos: N333 billion
• Participating GenCos: 8
• Power plants covered: 17
• Second bond issuance: N729 billion
• Programme launch value: N501 billion
  • Cash: N300 billion
  • Bond instruments: N201 billion
• Federal Executive Council initiative: N4 trillion
• Verified liabilities: About N3.3 trillion
• First bond coupon paid: N63.5 billion
• Bond tenor: Seven years

WHO WINS / WHO LOSES

Winners: Electricity generation companies, gas suppliers, lenders, maintenance contractors and long-term investors participating in the bond programme.

Losers: Market participants dependent on delayed payment practices and entities with unverified debt claims.

POLICY SIGNALS

The Federal Government is institutionalising debt resolution through market-based financing rather than ad hoc fiscal interventions. The emphasis on verification, repayment discipline and bond financing signals a stronger commitment to restoring commercial sustainability in the electricity sector.

INVESTOR SIGNAL

Successful coupon payments and verified debt settlement improve confidence in power sector securities and may reduce perceived payment risk. Continued execution will be critical to attracting pension funds, insurers and other institutional investors into future infrastructure financing.

RISK RADAR

The programme’s success depends on sustained fiscal discipline, timely bond servicing and broader electricity market reforms. Delays in future repayments, weak sector cash flows or slower implementation of structural reforms could undermine investor confidence and limit the programme’s long-term impact.