Governments in Nigeria, Ghana and South Africa are clearing their legacy energy-sector arrears at a time when banking regulators are requiring lenders to recognise and resolve long-standing exposures. This will strengthen operators' balance sheets but will also expose non-performance further down the payment chain.
Ahead of African Energy Week 2026 in Cape Town, Joe Hancock and John Sendama consider how the settlement cycle may create a window for consensual resolution, and how asset intelligence can support lenders' existing security and enforcement strategies in those cases where a borrower or sponsor does not engage.
The end of forbearance
The withdrawal of forbearance has crystallised a long-deferred problem in energy lending into a recognised one. From 2020, regulatory forbearance allowed Nigerian banks to restructure loans to sectors including oil and gas and power without classifying them as impaired. Ghanaian lenders face a comparable adjustment under a fixed timetable. The Bank of Ghana has directed each regulated institution to reduce its ratio of non-performing loans (NPLs) to performing loans to no more than 10 per cent by the end of December 20261.
The rise in reported NPLs is best understood as the recognition of losses that originated elsewhere in the payment chain. In the power sector in particular, distress has often begun with distribution companies and state offtakers that were unable to pay generators and gas suppliers.
Why banks now need to resolve these loans
A combination of circumstances has given lenders a reason to resolve legacy energy exposures now rather than carry them. Regulators proactively wanted a resolution, to boost commercial bank solvency and increase market and institutional liquidity. Alongside this, institutional lenders and the World Bank wanted states to clear the backlog before they would extend lending to states, which in turn put pressure on resolution by either payment or restructuring, therefore to identify good and bad debts. Finally, states needed to have certainty of the performance of energy and utilities, to ensure businesses and other users could remain open, and to preserve their own state credit.
Previous direction, such as the Central Bank of Nigeria's circular of 13 June 2025, requires banks operating under forbearance to suspend dividend payments and defer bonuses to directors and senior management until the forbearance is fully exited and their capital adequacy and provisioning are independently verified.
In Ghana, institutions that exceed the 10 per cent ceiling after December 2026 must notify the regulator within 10 days and submit a board-approved reduction plan, and Graphic Online has reported that missing the target could lead to a ban on dividend and share bonus payments from January 2027.
Separating cannot pay from won't pay
A large proportion of these loans will be resolved without enforcement. Some are simply bad debts that cannot be realised. Many will be restructured on terms that reflect the borrower's realistic capacity to pay, and some power-sector exposures will be 'cured' by government settlement of arrears, equity relief or by absorption of the debt onto national balance sheets.
For recovery purposes the relevance of these payments is narrow. Once a borrower's arrears from the state have been settled the borrower can no longer attribute its default to government non-payment, and a continuing failure to pay becomes a clearer indication that the exposure should be treated as an enforcement case.
Where intelligence supports enforcement
The loans that remain after restructuring and settlement are likely to be those where the borrower or its sponsor can pay but has not, or where value has moved out of the obligor group.
It is probable that most energy exposures will be resolved consensually, through restructurings that reflect settlement receipts. Where a borrower or sponsor does not engage, however, the effectiveness of the lender's existing security and enforcement strategy may depend on an accurate picture of where value is now held, which in a cross-border group may extend to London, the UAE and offshore structures. Even where there is a settlement, they may be challenged as unfair/improper as corrupt restructurings.
For example, AMCON's managing director has stated that 350 obligors account for more than 80 per cent of the loans it acquired and that nearly 300 of them are in litigation, and recent high-value receiverships in the Nigerian oil and gas sector have been contested at length through the appellate courts. AMCON has itself stated that it expects its recovery partners to identify obligors' assets, "both pledged and unpledged".
Intelligence gathered through open-source research, corporate and property records, human sources and forensic review of transactional data can inform applications in England and Wales for worldwide freezing orders, Norwich Pharmacal and Bankers Trust disclosure against third parties, and the recognition and enforcement of Nigerian, Ghanaian or South African judgments, whether by registration under the applicable statutory regime or by action at common law. Used in this way, the investigation extends the reach of the lender's security and existing judgments; it does not replace them.
Borrower- and sponsor-side indicators
Settlement periods tend to create movement within obligor groups. Lenders may wish to monitor related-party transactions, particularly those involving newly formed entities or entities outside the obligor group; the transfer or assignment of receivables, bond allocations or settlement proceeds to accounts or companies outside the security net; encumbrances over assets that were not disclosed at the time of lending or restructuring; changes of control, directorship or beneficial ownership shortly before or after settlement payments; and the relocation of assets or management to other jurisdictions.
Practical points for lenders
- Settlement mapping: lenders may wish to identify, for each exposure, whether the borrower or its counterparties participate in a settlement programme, and the timing and form of expected receipts.
- Documentary coverage: it will be prudent to confirm that security and account arrangements capture settlement cash and any non-cash instruments allotted to the borrower.
- Early engagement: a settlement receipt is likely to present the most favourable moment for a consensual restructuring.
- Proportionate intelligence: where engagement stalls, a targeted asset review ahead of any enforcement step can help the lender decide which remedies to seek and in which jurisdictions. It is key to understand in advance, what is being proposed by States in terms of settlement, equity and changes to laws which prevent ongoing collection.
Questions lenders may wish to ask
- Has the obligor received, or does it expect to receive, settlement proceeds or bond allocations, and into which accounts, or the benefit of payment relief or settlement through another means?
- Have any receivables, assets or instruments moved outside the obligor group since the exposure was restructured?
- Are there assets or related entities in England, the UAE or offshore jurisdictions that could be reached through existing judgments or freezing relief?
- Has there been any change in control or beneficial ownership that the lender has not been notified of?