FG Settles N333bn Debt Owed to Power Firms
The Federal Government has paid N333 billion to clear verified legacy debts owed to eight electricity generation companies. The cash disbursement covers 17 individual power plants across the country under the Presidential Power Sector Financial Reforms Programme. State administrators finalized the payout to relieve severe illiquidity across the domestic power value chain. The transaction completes the initial distribution under a broader debt restructuring framework approved by President Bola Tinubu. State interventions remain the primary lifespan of the nation’s fragile electricity grid. Total financial recovery requires continuous capital delivery.
The latest payment stems from a N501 billion Series I debt package deployed in February. That initial offering comprised N300 billion in direct cash and N201 billion in non-cash bond instruments. State officials also cleared the first bond coupon payment of N63.5 billion on schedule on 14 July. Following this prompt repayment, the state launched a second Series II bond offering valued at N729 billion on Tuesday. This newest issuance aims to scale the debt settlement model to additional power producers and fuel suppliers. The combined issuances represent the opening phase of a massive N4 trillion state intervention program.
Special Adviser to the President on Energy Olu Verheijen defended the capital market approach at an investors’ forum in Abuja. She insisted that government credibility relies on performance rather than empty administrative promises. Finance Minister Taiwo Oyedele revealed that line-by-line verification reduced total outstanding sector claims from over N4 trillion to N3.3 trillion. Administrators argue that converting stagnant liabilities into fresh liquidity will restore long-term investor confidence. The state hopes to transform an unsustainable balance sheet into a bankable commercial market. Capital always follows demonstrated institutional reliability.
The initial cash injections have already provided immediate breathing room for struggling power generation entities. Participating producers are using the recovered funds to settle long-overdue invoices with primary natural gas suppliers. The payments also allow operators to service commercial bank loans and maintain critical plant equipment. Nigerian Bulk Electricity Trading Plc confirmed that the debt reduction framework has successfully demonstrated market viability. Restoring cash flow enables generation companies to keep turbine capacity connected to the national grid. Financial liquidity remains vital for keeping the lights on.
Despite the official celebration, power generation companies warn that financial relief remains incomplete and largely superficial. Executive Secretary of the Association of Power Generation Companies Joy Ogaji noted that the bond package covers debts accumulated only up to December 2024. She warned that unpaid bills for 2025 and 2026 continue to pile up rapidly across the sector. Regional distribution companies and state trading bulk buyers still fail to settle their full monthly invoices. Industry representatives project that fresh unpaid liabilities will exceed N7 trillion by 2033 if structural payment defects persist. Borrowing money cannot substitute for actual revenue collection.
The persistent liquidity deficit stems from deep structural flaws within the retail power distribution network. Distribution companies chronically fail to collect sufficient revenues from end-user consumers to cover whole-market costs. Regulators also rely on assumed state subsidies that lack direct backing within the national annual budget. Ogaji urged administrators to establish clear subsidy provisions instead of maintaining opaque financial assumptions. Without comprehensive market overhauls and tariff adjustments, incoming bond proceeds will merely delay an inevitable financial collapse. Paper financial instruments will never fix broken physical infrastructure.