Juliet Ezeh
Power generation companies in Nigeria are facing renewed liquidity pressure months after the Federal Government raised N501bn through a bond aimed at settling longstanding electricity debts.
Findings indicate that despite the successful issuance of the bond under the Presidential Power Sector Debt Reduction Programme, no disbursement has yet reached beneficiary companies, raising concerns over cash flow in the sector.
Liquidity Strain Raises Operational Risks
Industry operators say the delay is compounding existing financial stress across the Nigerian Electricity Supply Industry, where companies are already grappling with rising operational costs and limited access to capital.
The Executive Secretary of the Association of Power Generation Companies, Joy Ogaji, confirmed that payments have not commenced, noting that firms remain in ожидание of funds.
Westbridge reports that the delay is intensifying liquidity constraints, with potential implications for power generation capacity and service delivery if unresolved.
Bond Success Yet to Translate Into Relief
The Federal Government had issued the N501bn bond as part of broader efforts to clear an estimated N4tn owed to power generation companies. The instrument, executed through Nigerian Bulk Electricity Trading Plc, recorded full subscription, attracting strong participation from institutional investors.
Officials had described the oversubscription as a signal of investor confidence in ongoing reforms. However, the absence of actual cash disbursement months later is raising concerns about implementation timelines.
Partial Agreements, No Cash Flow
Under the programme, five generation companies reached settlement agreements covering electricity supplied over a ten-year period. The negotiated value for these companies is estimated at over N800bn, to be paid in phased instalments.
Despite these agreements, the lack of fund release has left operators unable to access immediate liquidity, undermining the intended stabilisation effect of the programme.
Debt Burden Continues to Weigh on Sector
The accumulated debt, driven largely by tariff shortfalls and structural inefficiencies, remains one of the biggest challenges in Nigeria’s power value chain.
Power generation companies have consistently warned that unpaid invoices weaken their financial position, limit maintenance of infrastructure, and discourage new investments.
Westbridge analysis indicates that without timely settlement, the sector risks a cycle of underperformance, where limited cash flow constrains output, further affecting revenue across the value chain.
Broader Impact on Electricity Supply
Analysts note that liquidity challenges at the generation level often have ripple effects across transmission and distribution segments.
With gas supply costs, foreign exchange pressures, and maintenance expenses rising, delayed payments could affect the ability of GenCos to operate optimally, potentially impacting electricity supply nationwide.
Implementation Gap Raises Policy Questions
While the debt reduction programme was designed as a major intervention to restore financial stability, the current delay highlights ongoing challenges in translating policy commitments into operational outcomes.
Westbridge reports that stakeholders are increasingly focused on execution, as confidence in the reform process depends not only on funding announcements but on timely delivery.
Outlook
The Federal Government has maintained that the programme will be implemented in phases, with payments structured over time. However, industry participants say immediate liquidity support remains critical to stabilising operations.
Westbridge notes that closing the gap between policy design and execution will be essential to restoring confidence, improving power supply, and attracting long-term investment into Nigeria’s electricity sector.
Juliet Ezeh is the founder and chief reporter at Westbridge Reporters with over 7 years of experience in journalism. She covers crime, industry, policy, and social developments, delivering timely and accurate reporting.