Electricity generation companies have cautioned that the Federal Government’s plan to clear legacy debts in the power sector may not be enough to restore the industry’s financial health, warning that fresh liabilities could exceed N7tn before the programme is fully completed.
The warning comes as the government moves ahead with its Presidential Power Sector Debt Reduction Programme, which is designed to settle long-standing obligations owed to power generation companies through bond issuances.
Under the initiative, the Federal Government plans to issue a second bond valued at about N729bn to pay verified legacy debts. The new issuance follows an earlier bond of roughly N501bn floated in January 2026, bringing the total value of the first phase of the programme to about N1.23tn.
The Nigerian Bulk Electricity Trading Plc said the two bond issuances form part of a broader N4tn debt settlement programme approved by President Bola Tinubu to address outstanding financial obligations in the electricity sector. According to the agency, the first bond has already recorded its initial principal and coupon repayment, demonstrating the government’s commitment to meeting its obligations and improving investor confidence.
However, the Association of Power Generation Companies argued that while the bond programme is a welcome step, it does not tackle the deeper liquidity challenges facing the Nigerian Electricity Supply Industry.
Chief Executive Officer of the association, Joy Ogaji, said power producers were not opposed to the government’s borrowing plan but stressed that debts continue to accumulate because market participants are still not receiving full payments for electricity supplied.
She noted that the N4tn programme only covers obligations outstanding up to December 2024, leaving debts from 2025 and 2026 unresolved. According to her, if the current payment shortfalls continue throughout the seven-year implementation period, additional liabilities exceeding N7tn could build up before the programme is concluded.
Ogaji also called on the government to publicly disclose the beneficiaries of the first bond issuance and the amounts disbursed to each recipient, saying greater transparency would strengthen confidence in the debt settlement process.
She maintained that a sustainable financing framework is needed to prevent the continuous build-up of debts, adding that simply issuing bonds without addressing the root causes of the liquidity crisis would provide only temporary relief.
The GenCos further urged the Federal Government to review its electricity subsidy policy, arguing that existing subsidies are not backed by adequate budgetary provisions.
According to Ogaji, the government should clearly define the level of subsidy it can finance, make specific budget allocations for it, and identify the categories of electricity consumers that would benefit, rather than maintaining a broad subsidy arrangement that continues to create unpaid obligations across the value chain.
She warned that unless broader market reforms are implemented alongside the debt repayment programme, the financial pressures facing the electricity sector would persist despite the government’s intervention.
