This Electricity Bailout Must Work

Weekend Trust Page 3 Comment, November 1, 2025

On Monday, October 6, 2025, the Minister of Power, Adebayo Adelabu, announced the approval of issuance of up to N4 trillion ($2.6bn) in government-backed bonds to settle verified arrears of debts owed to generation companies (GenCos) and gas suppliers.

Adelabu, who spoke at the Expert Forum on “Uninterrupted Power: The Industrial Imperative” organised by the Nigeria Economic Summit Group (NESG) in Abuja, said it was a major step towards restoring the financial health of power companies, boosting investor confidence in the electricity market and addressing structural bottlenecks towards laying the groundwork for large-scale private sector-led investment and sustained economic growth.

Specifically, the bond will clear a significant portion of the N4 trillion debt owed to GenCos for the electricity they have supplied since 2015. Their umbrella body , the Association of Power Generating Companies (APGC), had earlier warned that the severe liquidity crisis had become an “existential threat” to their operations.

Being implemented under the Presidential Power Sector Debt Reduction Plan, the landmark initiative approved by President Bola Ahmed Tinubu had earlier in August been endorsed by the Federal Executive Council (FEC). Also on Tuesday, October 7, 2025, the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, Minister of Power, Adelabu and the Special Adviser to the President on Energy, Mrs Olu Verheijen, met with senior executives of Nigeria’s electricity generation companies (GenCos) to review settlement modalities for the outstanding debt. The meeting concluded with a consensus on the way forward, which includes conducting bilateral negotiations to finalise full and final settlement agreements that balance fiscal realities with the financial constraints of the GenCos.

Daily Trust believes that the issuance of the bonds and offsetting of the debts is a good development and represents a critical lifeline as one of the major factors hindering the sector is funding. We hope it comes to pass and will capture a significant portion of the sector’s prohibiting debts. This is more so as the national grid indicates a capacity of 13,014.40 MW (13 gigawatts GW) since July 2021 (GW) but it typically generates and dispatches only a fraction of that amount – 3,000–5,000 GW due to liquidity, gas supply and transmission constraints.

But we note that since the Nigerian electricity industry was privatised in November 2013 when the government sold majority shares in the six electricity GenCos and 11 distribution companies (DisCos) to private investors, the same government has unfortunately been intervening to bail them out. Therefore, we insist that there should be a caveat to the disbursement.

Going forward, any of these companies that is nonperforming after receiving the bailout fund should be taken over by the Assets Management Company of Nigeria (AMCON).

We also insist that the processes to the issuance of the bonds and the disbursement of the funds should be transparent and devoid of any opaqueness. And the beneficiaries and the amounts should be known to Nigerians; after all, it is being done with the backing of the government who acts on behalf of the people and the bonds will be repaid.

That the N4 trillion bond will be issued in the first instance to fund the electricity sector does raise issues about the major shortcomings and the market design flaws of the privatisation system. It is worrisome that this is happening even after the Bureau of Public Enterprises’ (BPE) due diligence during privatization, which in the end allowed entities without sufficient technical or financial capacity to acquire the electricity sector assets.

Yes, the private operators inherited an infrastructure and system with significant legacy debt and a preexisting culture of non-payment and poor metering, but not much has been done in almost 13 years to change the trajectory of the sector.

“GenCos should see the new fund as a bridge to their selfsufÀciency, not a recurring programme. There must be no further bailout for the sector.“

With the new funds coming, the Nigerian Electricity Regulatory Commission (NERC) should begin a new focus on effective enforcement of the GenCos and DisCos by holding them accountable for their performance and contractual obligations. These companies should also block all avenues for technical and collection losses by implementing effective operation and cost recovery initiatives.

That the government is intervening to significantly resolve the liquidity crisis plaguing the sector should be a wakeup call for the operators to ensure that all the issues related to the larger and more complex failure of Nigeria’s power sector reforms become a thing of the past.

This newspaper also expects the GenCos to use the opportunity of the intervention funds to invest in new generation capacity, modernise their operations in order to aid the expansion of grid infrastructure and delivery of more reliable electricity to homes and businesses. This will surely create a better environment for industrialisation, job creation and inclusive economic growth.

Most importantly, GenCos should see the new fund as a bridge to their self-sufficiency, not a recurring programme. There must be no further bailout for the sector. In 2017, a N701 billion Power Assurance Guarantee (PAG) was provided by the Central Bank of Nigeria (CBN) to the Nigerian Bulk Electricity Trading Plc (NBET) to address the severe liquidity crisis in the sector then. Public funds should no more be used to fund privatised entities.

These companies must demonstrate unquestionable technical expertise, financial stability and commitment to national interest and not spend its time lamenting and waiting for another government’s intervention.

Beyond the clearing of the arrears, the federal government should reposition Nigeria for energy security and sovereignty that will position it as one of Africa’s most attractive power markets.

The goal of uninterrupted electricity supply as a national objective should not continue to remain elusive. The time is now, not later, to begin a new era without power outages, inadequate power generation, unstable networks, lack of liquidity, deficiency of meters and financially struggling GenCos and DisCos. The expectation of the privatisation should be a time of efficient performance, not pervasive apprehension for Nigerian electricity customers.