GenCos Debts: Geregu, Niger Delta Power, Others Reach Settlement Agreement as FG Issues ₦501bn Bond

In a landmark move for Nigeria’s energy sector, the Federal Government has successfully issued a ₦501 billion inaugural bond to settle decade-old debts owed to Generation Companies (GenCos).

The bond issuance, which closed on January 27, 2026, marks the first major tranche of the Presidential Power Sector Debt Reduction Programme (PPSDRP).

The bond issuance recorded 100 per cent subscription from pension funds, banks, asset managers and other investors.

For over a decade, the power sector has been constrained by liquidity issues arising from debts owed to GenCos, leading to discouragement of investments across the power sector value chain.

To tackle this long-standing issue, the federal government launched the PPSDRP in 2025 with a target of exploring an innovative financing mechanism to clear the legacy debts over time.

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The Series 1 Power Sector Bond Issuance conducted by Nigeria Bulk Electricity Trading (NBET) Finance Company Plc closed at ₦501 billion, comprising ₦300 billion raised from the capital markets and ₦201 billion in bonds allotted to participating power generation companies, reflecting strong investor confidence in the reform agenda.

At the bond issuance signing ceremony held in Lagos on January 27, Special Adviser to the President on Energy, Olu Verheijen, stated that the Programme reflects a significant reset of the electricity market, combining debt resolution with broader financial and structural reforms.

The Settlement Agreement

Five major power generation companies, representing 14 power plants, have officially signed Settlement Agreements with NBET. The participating companies include: Geregu Power Plc, Niger Delta Power Holding Company (NDPHC), First Independent Power Limited (FIPL), Ibom Power Company Limited, and Mabon Limited.

According to a statement from the Office of the Special Adviser to the President on Energy, the total negotiated settlement amount for these companies stands at ₦827.16 billion, to be paid in four phased instalments. The amount is for electricity supplied between February 2015 and March 2025.

The president’s aide explained that the ₦501 billion bond raised in Series 1 will be used to fund the first two installments (estimated at ₦421.42 billion), representing about 50 per cent of the total debt.

It further clarified that the payment for this initial phase will be made through a mix of cash and notes.

Commenting on the development, Mr. Kola Adesina, Group Managing Director of Sahara Power Group, which owns five power plants, said the move signals restoration of confidence in the power sector, thereby encouraging investors to put in more money to upgrade and expand infrastructure.

Adesina said that over the years, investors were discouraged from making further investments in the power sector value chains as they saw no means of recovering previous investments.

“Capital formation can only come when there is confidence, when you can truly see a line of sight in recovering investments previously made. Because we were being owed so much, it was a bit of a problem for us to put in more money,” Adesina stated.

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On behalf of generation companies, the Sahara Group GMD thanked President Bola Tinubu for his commitment to resolving the legacy debt issues.

He revealed that once the process is over, his company would begin construction of the second phase of Egbin Power Plant.

Verheijen stressed that clearing the legacy debts would help to improve liquidity for power generation companies, strengthen their ability to meet operating and debt obligations, unlock new investment across the sector and support more reliable electricity supply to homes and businesses.

This means that GenCos like Geregu and NDPHC can now pay their gas suppliers and meet operational costs.

According to the Special Adviser to the President on Energy, the programme also strengthens fiscal discipline through validated claims, negotiated settlements and transparent capital market financing.

She acknowledged the visionary leadership provided by President Tinubu and support from Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, and the Minister of Power, Chief Adebayo Adelabu, in making the PPSDRP a reality. She also commended members of the Presidential Power Sector Debt Reduction Committee and other key stakeholders, including the Debt Management Office, Central Bank of Nigeria, the National Pensions Commission, and the Nigerian Revenue Service, who played vital roles in making the capital raise a success.

She affirmed that the Federal Government remains committed to “disciplined implementation of the Programme, adding that the government looks forward to the participation of other power generation companies. She further emphasized that the reforms are “aimed at building a financially sustainable electricity market that is capable of supporting Nigeria’s long-term economic growth.”

Pinnacle Daily reports that CardinalStone Partners Limited, an investment banking firm in Nigeria, led the consortium of appointed professional parties as Lead Financial Adviser and Lead Issuing House to successfully execute the Series 1 Bond Issue. It worked closely with NBET and the Office of the Special Adviser on Energy that led the settlement negotiations and engagements with the Generation Companies.

Analysts observed that the 100 per cent subscription of the bond reflects growing investors’ interest in Nigeria’s power sector and belief in the current administration’s reforms and the Electricity Act of 2023.

The programme is projected to stabilize 4,483.60 MW of generation capacity, serving over 12 million registered customers.

The Federal Government plans to continue these issuances through 2026, with an ultimate goal of raising up to ₦4 trillion to completely clear the legacy debt overhang across the entire value chain.