The Federal Government has floated a ₦590bn sovereign bond as the first step toward clearing the more than ₦4tn owed to power generation companies, GenCos, in what it describes as a critical move to restore liquidity and confidence in the electricity market.
For years, GenCos have warned that mounting unpaid invoices from the Nigerian Bulk Electricity Trading Plc and the Market Operator have undermined their ability to maintain plants, invest in new capacity and meet rising national demand.
The newly issued bond is expected to ease some of that financial pressure and create a more stable foundation for ongoing power-sector reforms.
According to government officials, the bond represents only the initial tranche of a structured repayment plan, with subsequent issuances expected as part of a wider strategy to clean up arrears accumulated over several regulatory cycles.
Stakeholders say settling the long-standing liabilities will help reduce the liquidity shortfalls that have plagued the sector since privatisation, while also improving investors’ perception of the Nigerian electricity market.
The repayment plan is also seen as essential for revitalising GenCos, many of which have been operating far below installed capacity due to financial constraints and irregular payments.
Analysts note that the intervention could have ripple effects across the entire value chain, from transmission to distribution.
Improved cash flow for GenCos may enable more reliable generation, while steady market payments could strengthen the financial position of other sector players and support long-planned infrastructure upgrades. The reform is ultimately aimed at stabilising supply, reducing operational shocks and positioning the electricity market for long-term efficiency and private-sector investment.
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