Government Approves N4 Trillion Bonds to Address Power Sector Debt
On Monday, October 6, 2025, the Minister of Power, Adebayo Adelabu, announced the approval of government-backed bonds worth up to N4 trillion ($2.6 billion) to settle verified debts owed to generation companies (GenCos) and gas suppliers. This decision was made during the Expert Forum on ‘Uninterrupted Power: The Industrial Imperative’ organized by the Nigeria Economic Summit Group (NESG) in Abuja.
Adelabu emphasized that this move is a significant step towards restoring the financial health of power companies, boosting investor confidence, and addressing structural bottlenecks that hinder large-scale private sector investment and sustained economic growth. The bond issuance aims to clear a substantial portion of the N4 trillion debt owed to GenCos for electricity supplied since 2015. The Association of Power Generating Companies (APGC), the umbrella body for GenCos, had previously warned that the liquidity crisis posed an “existential threat” to their operations.
The initiative, implemented under the Presidential Power Sector Debt Reduction Plan, was approved by President Bola Ahmed Tinubu and endorsed by the Federal Executive Council (FEC) in August 2025. On Tuesday, October 7, 2025, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, along with the Minister of Power, Adelabu, and the Special Adviser to the President on Energy, Mrs. Olu Verheijen, met with senior executives of Nigeria’s electricity generation companies. The meeting concluded with a consensus on the way forward, including bilateral negotiations to finalize full and final settlement agreements that balance fiscal realities with the financial constraints of the GenCos.
This development is seen as a critical lifeline for the sector, which has long been hindered by funding shortages. Despite the national grid having a capacity of 13,014.40 MW (13 gigawatts) since July 2021, it typically generates and dispatches only a fraction of that amount—between 3,000-5,000 GW—due to liquidity, gas supply, and transmission constraints.
However, there are concerns about the government’s role in bailing out privatized entities. Since the Nigerian electricity industry was privatized in November 2013, the government has frequently intervened to rescue struggling companies. As such, there is a call for a caveat to the disbursement of funds. Any non-performing company after receiving the bailout should be taken over by the Assets Management Company of Nigeria (AMCON).
Transparency in the issuance of the bonds and the disbursement of funds is essential. The beneficiaries and the amounts should be known to Nigerians, as the government acts on behalf of the people, and the bonds will eventually be repaid.
The issuance of the N4 trillion bond raises questions about the shortcomings and market design flaws of the privatization system. It is concerning that entities without sufficient technical or financial capacity were allowed to acquire electricity sector assets, despite the Bureau of Public Enterprises’ (BPE) due diligence during privatization.
While private operators inherited infrastructure with significant legacy debt and a pre-existing culture of non-payment and poor metering, little has been done in almost 13 years to change the trajectory of the sector. With the new funds coming in, the Nigerian Electricity Regulatory Commission (NERC) should focus on effective enforcement of GenCos and DisCos, holding them accountable for their performance and contractual obligations. These companies should also implement initiatives to block technical and collection losses.
The government’s intervention to resolve the liquidity crisis should serve as a wake-up call for operators to address the larger issues related to the failure of Nigeria’s power sector reforms. The newspaper expects GenCos to use the opportunity of the intervention funds to invest in new generation capacity, modernize operations, and expand grid infrastructure to deliver more reliable electricity.
Most importantly, GenCos should view the new fund as a bridge to self-sufficiency, not a recurring program. There must be no further bailout for the sector. In 2017, a N701 billion Power Assurance Guarantee (PAG) was provided by the Central Bank of Nigeria (CBN) to the Nigerian Bulk Electricity Trading Plc (NBET). Public funds should no longer be used to support privatized entities.
These companies must demonstrate technical expertise, financial stability, and commitment to national interest, rather than waiting for another government’s intervention. Beyond clearing arrears, the federal government should reposition Nigeria for energy security and sovereignty, positioning it as one of Africa’s most attractive power markets.
The goal of uninterrupted electricity supply should not remain elusive. The time is now to begin a new era without power outages, inadequate generation, unstable networks, lack of liquidity, and financially struggling GenCos and DisCos. The expectation of privatization should be a time of efficient performance, not pervasive apprehension for Nigerian electricity customers.