FG to clear legacy N4trn power sector debt through bond issuance

By Seun Ibiyemi

The Federal Government has concluded plans to issue a massive ₦4 trillion government-backed bond to settle verified legacy debts owed to power Generation Companies (GenCos) and gas suppliers.

This landmark intervention, the largest in over a decade, is aimed at resolving the chronic liquidity crisis that has hampered investment and reliable electricity supply in Nigeria's power sector.

The breakthrough was announced on Tuesday by the Special Adviser to the President on Energy, Mrs. Olu Verheijen, following a high-level meeting in Abuja involving key economic and power officials.

For years, the Nigerian power sector has been crippled by an accumulation of huge verified payment shortfalls. While the exact total debt has been subject to continuous verification, industry figures have often placed the verified arrears to GenCos and gas suppliers at over ₦2 trillion in recent times, a figure the new ₦4 trillion intervention is designed to comprehensively address, alongside other verified obligations.

The meeting, attended by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, the Minister of Power, Chief Bayo Adelabu, and Mrs. Verheijen, resulted in a consensus to conduct bilateral negotiations.

These negotiations will finalize a full and final settlement agreement that balances the government's fiscal realities with the pressing financial needs of the power companies.

Senan Murray, Head of Media and Communications in the Special Adviser's office, described the bond program as a major step by the federal government toward restoring financial stability and investor confidence in the electricity market.

He noted that the debt overhang had weakened utility balance sheets and constrained necessary investment.
The initiative, which received approval from President Bola Ahmed Tinubu and the Federal Executive Council, is a core component of broader structural reforms. These reforms are designed to modernize the power grid, scale embedded generation, and create the necessary conditions for large-scale private sector-led investment and sustained economic growth.

Mrs. Verheijen emphasized that the government's priority is to build a truly sustainable power sector by closing metering gaps, aligning tariffs with efficient costs, improving subsidy targeting for vulnerable citizens and rebuilding regulatory trust.

“The sector is shifting from crisis response to sustained delivery and building the confidence needed to attract large-scale private capital,” she affirmed.

Minister of Finance, Mr. Wale Edun, stressed that the reforms extend beyond short-term liquidity fixes.

“We are rebuilding the fundamentals so that Nigeria’s power sector works for investors, for citizens, and for the next generation,” Edun said, adding that complementary efforts to scale renewable energy and leverage domestic gas would enhance Nigeria's energy security.

Mr. Tony Elumelu, Chairman of Heirs Holdings and Transcorp Power, commended President Tinubu and his team for taking a credible and systematic approach to resolving the sector’s protracted liquidity challenges.

Similarly, Mr. Kola Adesina, Group Managing Director of Sahara Power Group, hailed the move as a significant milestone that renews confidence in power sector reforms and signals a genuine government commitment to building a sustainable electricity market.

The Presidential Power Sector Debt Reduction Plan is a collaborative effort jointly implemented by the Federal Ministry of Finance, the Federal Ministry of Power, and the Office of the Special Adviser to the President on Energy, in partnership with the Nigerian Bulk Electricity Trading (NBET) Plc and other key sector entities.