Rising Electricity Sector Debt Threatens Federal Government’s N1.2 Trillion Bond

Nigeria’s power sector is facing a severe financial crisis as the total debt owed by electricity consumers—including government agencies and private users—has surged by 62.5% in just one year. This massive spike in unpaid bills is now threatening the success of the Federal Government’s planned N1.2 trillion bond, which was intended to stabilize the sector.

According to latest reports, the liquidity squeeze in the Nigeria Electricity Supply Industry (NESI) has worsened because Distribution Companies (DisCos) are struggling to collect payments. This failure to recover costs means the DisCos cannot meet their financial obligations to GenCos (Generation Companies) and gas suppliers. With debt levels rising so sharply, investors are reportedly becoming hesitant to back the N1.2 trillion bond, fearing that the sector’s "collection gap" makes it a high-risk investment.

The power sector could face a total collapse, leading to more frequent national grid failures and prolonged blackouts. The Federal Government is currently under pressure to enforce stricter payment policies and perhaps accelerate the installation of prepaid meters to ensure that energy consumed is actually paid for. Without this liquidity, the planned financial intervention may fail to yield the desired results for Nigeria's struggling power infrastructure.

Do you think stricter penalties for unpaid electricity bills are the solution, or should the government focus on fixing the estimated billing system first? Share your comments below!

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