- Geregu Power Plc has defaulted on a bond payment, raising fresh concerns about the financial health of the generation sector.
- The default could weaken investor confidence as generators face mounting debts and cash-flow challenges.
Geregu Power Plc has defaulted on a bond payment, raising fresh concerns about the financial health of Nigeria’s electricity generation sector.
The default marks the first comparable corporate debt failure in Nigeria in seven years. FMDQ Securities Exchange flagged Geregu’s ₦40.09 billion Series 1 Senior Unsecured Bond for a missed coupon and principal payment. The company issued the bond in July 2022 at a fixed interest rate of 14.5 per cent. It forms part of Geregu’s ₦100 billion debt program and was scheduled to mature in July 2029.
The missed payment comes as Geregu’s financial performance has weakened sharply. Its profit after tax fell 88 per cent to ₦2.5 billion in the first half of 2026, compared with ₦20.27 billion a year earlier. Revenue also dropped 78.7 per cent to ₦18.65 billion. The decline became more severe in the second quarter, when revenue fell to ₦419.1 million from ₦55.87 billion in the same period last year.
Geregu’s cash position, however, appears stronger on paper. Cash and cash equivalents rose 43 per cent to ₦56.7 billion during the period. That contrast has raised questions about how the company managed its available funds. Investment management expert Abdulrauf Bello said Geregu generated strong operating cash flow last year but paid substantial amounts to shareholders and creditors.
He argued that the company should have retained more cash as its core business weakened. Bello also noted that much of Geregu’s cash generation in the first half of 2026 came from working-capital movements rather than underlying operations.
The company’s dividend decision could also attract scrutiny. Geregu shareholders approved a ₦9-per-share dividend at the company’s June 30 annual general meeting.
The payout amounted to about ₦22.5 billion. The dividend came despite the company’s weaker earnings and declining revenue.
Geregu’s operational difficulties appear central to the financial pressure. The company built its business around gas-fired generation after acquiring the Ajaokuta power plant in 2013. It later became one of Nigeria’s leading power producers and listed on the Nigerian Exchange in 2022. Investors initially viewed the company as a rare opportunity to gain exposure to Nigeria’s growing electricity market.
Its share price has since weakened. Geregu’s stock closed at ₦825.70 on August 7, down from ₦1,141.50 at the start of the year.
The bond default also comes at a difficult time for Nigeria’s power industry. The Federal Government is currently trying to clear billions of naira in unpaid obligations owed to electricity generation companies.
The Debt Management Office and Federal Ministry of Finance began book-building on August 3 for a ₦728.98 billion bond through NBET Finance Company Plc. The program aims to settle verified debts owed to power generators.
The government has put the verified sector debt at about ₦3.3 trillion. However, the Association of Power Generation Companies disputes that figure. The association estimates total industry debt, including obligations to gas suppliers, at ₦6.8 trillion as of March 2026. It expects the figure to reach about ₦7.66 trillion by June and could rise further without structural reforms.
Geregu’s default therefore extends beyond one company’s balance sheet. It highlights the financial pressures facing power generators that depend on reliable cash flows to maintain plants, pay suppliers and meet debt obligations. The incident could also affect investor confidence in future power-sector fundraising. Transgrid Enerco Limited, which owns a 60 per cent stake in Eko Electricity Distribution Plc, is reportedly considering a new bond issue.
For Nigeria’s electricity market, the bigger concern remains unchanged. Generators need predictable payments and sufficient financing to maintain assets and increase power supply. Without stronger sector-wide reforms, financial stress could continue to threaten investment in generation.