Power bond plans are raising hopes and fears in Nigeria’s long-troubled electricity market.
Decades of unpaid bills have forced Gencos and gas suppliers to struggle to stay operational.
Power plants sometimes sit idle while suppliers wait months for overdue payments.
Legacy Debts Cripple Power Bonds Sector
Consumers experience blackouts, and investors hesitate to fund a sector riddled with inefficiency.
The Federal Government plans to issue ₦4 trillion in bonds to settle legacy debts.
These bonds convert IOUs into tradable, sovereign-backed securities for Gencos and gas companies.
Phase 1 aims to raise ₦1.23 trillion, dividing it between cash and non-cash tranches.
Non-cash bonds give Gencos liquidity options without requiring immediate government cash.
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Structural Inefficiencies Bite
Discos billed only 86.4% of electricity delivered in September 2025, losing 13.6% to gaps.
They collected just 81.25% of billed amounts, leaving total sector losses above 30%.
Without payments, Gencos cannot pay gas suppliers, triggering fuel shortages and reduced generation.
The government positions the bonds as part of the Power Sector Debt Restructuring Programme.
Olu Verheijen confirms the bonds amortise gradually, easing fiscal pressure over time.
Critics Call For Reform
Critics warn the programme encourages market complacency and recurring reliance on bailouts.
Dr Ogunmodede calls it “using debt to pay debt” without deeper sector reforms.
Dr Yusuf urges audits, transparency, phased tariffs, and performance-linked reforms for Discos.
The government will issue the first tranche after verifying arrears and completing market audits.
Gencos receive tradable securities, which they can sell or use as collateral.
Success depends on stronger Disco performance, cost-reflective tariffs, and clear regulatory oversight.
Nigeria has waited decades for a sustainable solution, while this bond programme may only delay crises.
