The Federal Government has successfully raised N501 billion through a bond issuance aimed at settling long-standing debts owed to electricity generation companies (GenCos), marking a significant milestone in efforts to revive Nigeria’s ailing power sector.
The bond, which achieved 100% subscription shortly after launch, is designed to clear a substantial portion of accumulated payment arrears that have crippled generation capacity and contributed to persistent nationwide electricity shortages for over a decade.
President Bola Tinubu’s administration has hailed the development as a critical step toward stabilising the sector, improving liquidity for GenCos, and ultimately delivering more reliable power to homes and businesses. Officials described the full subscription as a strong vote of confidence from investors in the government’s power sector reforms and broader economic agenda.
However, the celebratory mood has been tempered by sharp criticism from the GenCos themselves. Industry stakeholders have warned that the bond’s structure could ultimately prove detrimental to their financial health, potentially creating new pressures rather than providing genuine relief. Sources close to the generation companies argue that the terms of repayment, interest rates, and disbursement mechanisms may not adequately address the scale of legacy debts or enable meaningful investment in plant maintenance, gas supply, and capacity expansion.
The controversy centres on whether the bond truly resolves the root causes of the payment crisis — chronic under-recovery of tariffs, gas supply constraints, and transmission bottlenecks — or merely shifts the burden in ways that could strain GenCos further. Some operators have privately described the arrangement as a “wolf in sheep’s clothing,” suggesting it risks locking them into a cycle of short-term liquidity relief followed by long-term financial strain.
The N501 billion raise comes at a time when Nigeria’s power sector remains in crisis, with average daily generation hovering well below installed capacity due to unpaid bills, inadequate gas supply, and ageing infrastructure. GenCos have repeatedly warned that without sustainable payment solutions, many plants could face further shutdowns or reduced output.
Government sources insist the bond is part of a broader strategy that includes tariff reforms, improved gas-to-power arrangements, and increased private-sector participation. They argue that clearing the arrears will unlock investment and help attract the capital needed to modernise generation and transmission networks.
The bond’s full subscription reflects strong investor appetite for government-backed instruments in the power sector, even amid macroeconomic challenges. However, the growing pushback from GenCos signals that resolving the sector’s deep-rooted issues will require more than debt restructuring — it will demand structural reforms that ensure long-term viability for generators, distributors, and consumers alike.
As the funds are disbursed in the coming weeks, attention will turn to how effectively the money addresses legacy debts and whether it translates into tangible improvements in electricity supply. For millions of Nigerians enduring frequent blackouts, the stakes remain high: this bond may offer temporary relief, but the real test will be whether it becomes a turning point or simply another chapter in the country’s long-running power struggle.
