By Anscella Obike
Fresh developments surrounding Geregu Power Plc have added a new dimension to the financial distress gripping Nigeria’s electricity industry, even as the Nigerian Electricity Regulatory Commission’s (NERC) takeover of Kaduna Electricity Distribution Company (KAEDC) continues to expose the depth of the sector’s structural weaknesses.
The decision by Geregu Power Chairman and Senator Abdulaziz Yari to personally provide funds to settle the company’s N40.09 billion Series 1 bond has averted an immediate credit crisis for one of Nigeria’s leading generation companies. However, together with NERC’s intervention at KAEDC, the episode underscores a more troubling reality: Nigeria’s electricity market remains trapped in a cycle of illiquidity that continues to threaten both generators and distributors despite changes in ownership and repeated government interventions.
Geregu recently came under pressure after FMDQ Exchange classified its Series 1 senior unsecured bond as being in credit default following the company’s failure to make its eighth coupon payment and fourth principal repayment. Although the scheduled debt servicing obligation was approximately N6.03 billion, the default raised concerns among investors because it involved a flagship listed power company with an investment-grade reputation.
In a dramatic intervention, Yari disclosed that he personally funded the settlement of the N40.09 billion bond to restore market confidence and protect the company’s reputation. The former Zamfara State governor said the debt originated from financing arrangements concluded in July 2022, more than three years before his investment vehicle, MA’AM Energy, acquired a controlling stake in Geregu in a transaction valued at about $750 million in December 2025.
According to Yari, the intervention was intended to reassure bondholders, safeguard shareholders and support President Bola Tinubu’s Renewed Hope Agenda by preventing a loss of confidence in Nigeria’s power sector. At the same time, he maintained that the payment does not resolve the question of ultimate liability, stating that Geregu would continue pursuing reimbursement from the company’s former management and board, whom he believes bear responsibility for the legacy obligation.
While Yari’s intervention has removed the immediate threat of prolonged default, it does not eliminate the underlying financial pressures confronting the generation company. Geregu’s revenue reportedly declined sharply during the first half of the year as delayed payments from the Nigerian Bulk Electricity Trading Plc (NBET) weakened its cash flow. The episode illustrates how even financially viable generators remain exposed to systemic payment failures beyond their operational control.
At the downstream end of the electricity value chain, KAEDC’s crisis presents an even more severe picture of market distress. Acting under the Electricity Act 2023, NERC dissolved the utility’s board and appointed special interim directors after determining that the company had become financially and operationally unsustainable.
The distribution company had accumulated market obligations of approximately N456.5 billion by May 2026, including debts owed to NBET, the System Operator and other statutory creditors. Under its latest core investor, ASI Engineering, KAEDC reportedly added more than N118 billion in fresh liabilities in less than two years.
Its operational performance reflected similar weaknesses. Aggregate Technical, Commercial and Collection (ATC&C) losses stood at 71.88 per cent, while the utility remitted only 41.93 per cent of market invoices in 2025. Capital expenditure also fell significantly short of regulatory expectations, with investments of N2.48 billion against a benchmark exceeding N24 billion.
Although the Geregu and Kaduna cases differ in nature, they originate from the same structural problem. Nigeria’s electricity market operates through a single financial chain in which consumers pay distribution companies, which are expected to remit collections to NBET and the System Operator before generators receive payment and subsequently settle gas suppliers.
When distribution companies fail to recover sufficient revenue because of poor metering, energy theft, weak collections and high technical losses, the funding shortfall spreads across the entire market. NBET becomes unable to fully pay generation companies, which in turn struggle to finance operations, meet debt obligations and attract fresh investment.
Geregu’s experience also highlights the growing risk facing Nigeria’s capital market. Although Yari’s personal intervention has prevented a prolonged bond default, the fact that a major listed power company required shareholder support to meet debt obligations may heighten investor concerns about lending to infrastructure companies dependent on the electricity market’s fragile payment system. This could increase borrowing costs for future energy projects and reduce private sector appetite for long-term financing.
Conversely, NERC’s decisive action against KAEDC demonstrates a tougher regulatory approach under the Electricity Act 2023. By removing the utility’s board and preparing the company for a potential equity restructuring, the regulator has signalled that persistent non-performance and chronic market defaults will no longer be tolerated.
However, neither shareholder bailouts nor regulatory takeovers can resolve the sector’s fundamental weaknesses. While Yari’s intervention has stabilised Geregu in the short term and protected investor confidence, it represents an extraordinary solution rather than a sustainable business model. Similarly, replacing management at distressed distribution companies will achieve little unless operational inefficiencies are addressed.
Ultimately, both developments reinforce the same conclusion: Nigeria’s electricity sector cannot achieve lasting financial stability without comprehensive reforms that improve revenue collection, accelerate metering, reduce ATC&C losses, enforce market discipline and implement commercially sustainable tariffs. Until those structural issues are resolved, liquidity crises will continue to migrate across the value chain, threatening generators, distributors, investors and the broader ambition of delivering reliable electricity to Nigerians.