Nigeria’s N1.23 trillion power sector debt settlement programme faces an operational test as average electricity generation declined by 0.30 per cent in September 2026, despite a 5.89 per cent increase in available generation capacity, raising questions about the impact of government-backed financing on electricity supply.
The Federal Government raised N1.23 trillion through two bond issuances in January and September 2026 to address legacy debts owed to electricity generation companies (GenCos) and improve liquidity across the power sector.
However, data from the Nigerian Electricity Regulatory Commission (NERC) showed that average hourly electricity generation fell to 4,089 megawatts (MW) in September from 4,102 MW in August, while available generation capacity increased to 5,038 MW from 4,758 MW.
The development comes as the government commits substantial financial resources to resolving the industry’s longstanding liquidity challenges, while power plants continue to record fluctuations in electricity generation.
The September figures showed that power plants utilised an average of 81 per cent of their available capacity, down from 86 per cent in August, leaving 949MW of available capacity unutilised on average.
The debt settlement programme is intended to address accumulated payment obligations that have constrained generation companies’ ability to meet operational expenses, maintain facilities and settle outstanding gas supply bills.
The first bond issuance, completed in January 2026, raised N501 billion, comprising N300 billion from the capital market and N201 billion in non-cash bonds allotted to participating GenCos.
The second issuance raised N728.979 billion in September, comprising N402 billion in cash bonds and N326.979 billion in non-cash bonds. This brought the cumulative bond issuance under the programme to approximately N1.23 trillion. Federal Ministry of Information.
The intervention followed a verification exercise that reduced legacy claims from more than N4 trillion to approximately N3.3 trillion, covering obligations accumulated between February 2015 and March 2025.
President Bola Tinubu approved the N3.3 trillion settlement plan in April 2026, after which 15 power plants signed settlement agreements worth N2.3 trillion. At the time of the announcement, the government said N223 billion had been disbursed from the first bond issuance. The State House, Abuja
By September, reports indicated that payments under the first issuance had increased to N333 billion, covering eight participating GenCos and 17 power plants. The first coupon payment of approximately N63.5 billion on the seven-year bond was also made in July.
On October 9, the Nigerian Bulk Electricity Trading Plc (NBET) announced it had begun settling participating GenCos and their associated gas suppliers under the second issuance. The settlement comprises cash and non-cash instruments under the approved framework.
