Geregu Power Plc (GEREGU), one of the prominent electricity generating companies in Nigeria, missed its bond obligations in August 2026, sending shock waves through the Nigerian capital market. The company raised ₦40.1 billion through a 14.5% 7-year unsecured corporate bond in 2022. In addition, GEREGU listed its shares at ₦100 per share on the Nigerian Stock Exchange in October 2022. It traded at ₦917.40 per share at the end of the second quarter of 2026. Investors bet on GEREGU because they perceived electricity generation in Nigeria a generation is a high revenue opportunity. Is GEREGU’s debt drama a wake-up call for the Nigerian corporate bond market and, by extension, the Nigerian capital market?
How does Geregu Power Plc make money?
The company’s business model is simple. It sells energy to the Nigerian Bulk Electricity Trading Plc (NBET), which then sells to electricity distribution companies. The distribution companies sell to the consumers. The electricity, such as GEREGU, is paid from the money distribution companies pay NBET, a company owned by the Federal Government of Nigeria.
The problem with this model is that it takes a long time before energy generating companies get paid. This makes it difficult for players in Nigeria’s power sector. The consequence of this is a cash flow and liquidity problem for energy generating companies. Therefore, energy companies require top-notch working capital management skills to avoid running into choppy waters. Over the past five years, it has taken GEREGU an average of about a year to receive payments from its debtors.
Geregu Power Plc’s debt drama
The high capital requirements of power generation, coupled with the liquidity risk, have increased GEREGU’s indebtedness. The company’s total debt (borrowings and bond payable) stood at ₦68.1 billion at the end of the 2025 fiscal year, that is, 31st December 2025. ₦39.9 billion or 58.6% of total debt must be settled within a year, that is, in 2026. GEREGU made total revenue of ₦184.9 billion in the whole of 2025. But it only made revenue of ₦18.7 billion in the first six months of 2026 compared with ₦87.6 billion in the first half of 2025. The net profit for the second quarter of 2026 was ₦2.5 billion as against ₦20.3 billion in the corresponding period of the previous year. By the end of the second quarter of 2026, short-term debt had reached ₦45.5 billion, including short-term bond payable of ₦11 billion. Its trade and other receivables for the half year were ₦106.9 billion. To worsen the situation, it sells on credit and has to wait for about a year to receive payments. It has debt obligations; it has to import equipment, and it has to pay for gas and other expenses. That makes the story of Geregu Power Plc particularly interesting.
Can investors trust Geregu Power Plc again?
GEREGU actually intends to raise more under the N100 billion debt issuance programme. The company was given the grace to start paying principal on the initial ₦40.1 bond after two years. But interest is paid twice a year. The failure to meet its obligations this time casts doubt on the company’s chance of raising further finance from the debt market. It may also dent the image of the Nigerian capital market as a reliable investment destination.
The issue with GEREGU is not the inability to generate enough profit or cash flow to settle its debt obligations. This is where the story gets complicated. It has also been paying dividends consistently to shareholders. However, cash flow management by the company is poor. The company just paid dividends of ₦22.5 billion for the 2025 fiscal year (2024: ₦21.3 billion). This casts doubt on the commitment of the management to settle the company’s debt obligations. It is not about the company; it is about the confidence in the country’s capital market.
Regardless of whether the market conditions are favourable or not, the company must manage its cash flows carefully enough to meet scheduled payments.
Is Geregu Power Plc viable?
The simplistic default narrative can be misleading. The company’s financial performance tells a different story. Notwithstanding the revenue dip in the first half of 2026, GEREGU’s long-term viability is not impaired. Over the past three years, the company has grown its revenue at a Compound Annual Growth Rate (CAGR) of 57.2%, while its net income has increased at a CAGR of 38.9%. Total assets peaked at ₦305 billion in 2025. The company has consistently produced a positive operating cash flow, and both operating profit and operating cash flow have covered its interest expense. The present predicament may not be unconnected to the environment in which it operates. The other participants in the value chain must meet their obligations or else the power generation company will be cash-strapped. The consequence is huge-it rubs off on the whole economy.
The company is not completely exonerated from risk. It has dented its image by defaulting on its bond obligations. And the focus of management should be on reducing its indebtedness and better working capital management. It must also find a way to create a sustainable business model.
The way out
GEREGU may have to refinance its debts, or raise additional finance to get out of the mess. NBET is also issuing a series of bonds to raise finance to settle outstanding obligations to energy generation companies in a bid to make the sector more attractive. It has listed a ₦501 billion bond in two tranches in the Nigerian debt market. The issuance is backed by the Federal Government of Nigeria.