The Federal Government has turned to the bond market to raise funds to settle its debts to power generation companies, which stood at about N6 trillion at the start of 2026. The move comes as the government struggles to fund electricity subsidies from the national budget.
The Nigerian Electricity Regulatory Commission (NERC), in its 2025 industry report, put the government’s gross tariff subsidy obligation at N1.928 trillion for the year, or 57.44 per cent of the total invoice from the Nigerian Bulk Electricity Trading Plc (NBET).
This works out to an average of N160.69 billion monthly. By quarter, the obligation stood at N536.40 billion in the first, N514.36 billion in the second, N458.76 billion in the third and N418.79 billion in the fourth. The 2025 figure was a slight drop from the N1.949 trillion recorded in 2024.
Series 2 bond
In September 2026, the government signed the N728.979 billion Series 2 bond under its N4 trillion Power Sector Debt Reduction Programme. The aim is to settle verified legacy debts owed to generation companies (GenCos) and restore liquidity to the sector.
The transaction comprises N402 billion in cash bonds raised from the domestic capital market and N326.979 billion in non-cash bonds allotted to participating GenCos.
Managing Director/CEO of NBET, Mr. Akin Odeyemi, said at the weekend that the company had begun settling participating GenCos and their associated gas companies following the issuance and signing of the bonds under the N4 trillion Power Sector Multi-Instrument Issuance Programme.
He described the development as “a significant step” in implementing the Presidential Power Sector Debt Reduction Programme, adding that the settlement would be done through a combination of cash and non-cash bonds “in accordance with the approved settlement framework”.
Odeyemi noted that, amid weak growth in power supply, the GenCos appeared to be weighed down by the government’s indebtedness to them.
Minister: Supply has improved
Despite concerns over the sector’s performance, the Minister of Power, Mr. Joseph Tegbe, insisted that electricity supply had improved over the past three months, though he admitted some parts of the country still experience poor supply.
He said generation and transmission had stayed above 5,000MW in recent weeks, compared with the 3,700MW to 4,700MW range before June, with a peak of 5,330MW recorded in August and September.
“Our next task is to sustain these gains and translate them into more dependable supply at customer level,” he said, adding that a national peak cannot describe the experience of every community.
Tegbe said the government’s efforts rest on three pillars: stabilising the value chain, restoring market discipline and strengthening governance. Under the first, the 375MW Alaoji open-cycle power plant was returned to the grid after three years offline. New transformers were commissioned at Apapa, Ijora, Alausa and Lekki in Lagos, unlocking 672MW of transmission capacity, while a new 300MVA transformer at Katampe, Abuja, unlocked another 240MW.
The minister said the government was also pushing solar power in its energy mix. According to him, the Rural Electrification Agency (REA) and its partners have completed 62 solar and mini-grid installations across 30 states, with about 43.6MW of installed capacity and 41,735 new connections, reaching more than 208,000 people.
‘Reform remains unfinished’
Special Adviser to the President on Power and Chairman of the Presidential Task Force on Power Sector Reset and Restoration, Dr. Lanre Babalola, said the reforms remained incomplete.
He said Nigeria’s problem was not simply a lack of generation capacity, but the absence of a system able to consistently convert available capacity into reliable electricity, commercial value and sustainable investment.
Babalola explained that the old vertically integrated utility was unbundled, generation and distribution assets were privatised and a bulk trader was set up, but the transition to a competitive electricity market was never completed.
He said the single-buyer model was meant to be temporary, with NBET acting as an intermediary while market players built the creditworthiness needed for direct contracting. “A transitional mechanism becomes a structural constraint if the transition never happens,” he said, stressing that the goal must be to complete the transition.
‘Nigerians have been paying for darkness’
Reacting to the figures, lawyer and Lead Consultant at Sage Consulting, Mr. Bode Fadipe, questioned whether consumers had received value for the money they paid for electricity.
“What this data has just confirmed is that Nigerians have been paying for darkness,” he said.
Fadipe blamed inadequate investment for the limited improvement in supply and said the data justified NERC’s directive that DisCos retain part of their revenue for investment. He noted that the DisCos had vehemently protested the order, but that compliance remained a separate issue to be established.
He urged NERC to enforce its investment directives, set timelines for improvements, order forensic audits of DisCos’ investments and work with market participants on debt recovery.
Consumer groups demand protection
Executive Director of the Electricity Consumer Protection Advocacy Centre, Chief Princewill Okorie, said the revenue figures raised questions about the quality of service delivered to consumers.
He said decentralisation of the sector under the new legal framework had brought regulation closer to consumers in the states, but enforcement of consumer protection provisions remained a major challenge. Consumers, he said, still face estimated billing, infrastructure charges and alleged non-compliance with regulatory directives, with some communities allegedly made to pay for transformers and other equipment despite DisCos’ obligations.
Okorie said while “consumers are not paying” is often cited as a reason for poor service, the basis on which bills are generated must also be examined. “How did they generate these bills? Were they justifiably, accountably and transparently generated?” he asked.
He called for a dedicated mechanism to investigate electricity-related violations, a consumer protection unit in the Federal Ministry of Power and a stronger role for consumer protection authorities in educating users on their rights. He also questioned claims that the government was subsidising the sector, noting that consumers provide much of the equipment DisCos use, including poles, cables and transformers, without reimbursement.
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