The Federal Government on Tuesday announced the successful completion of its inaugural N501 billion bond issuance aimed at settling long-standing debts in the power sector, in a move expected to restore liquidity and rebuild investor confidence in the electricity market.
The bond, issued under the Presidential Power Sector Debt Reduction Programme (PPSDRP), achieved full subscription from institutional investors, including pension funds, banks and asset managers. Proceeds from the Series 1 issuance will be used to offset a portion of legacy payment obligations owed to power generation companies (GenCos).
According to the government, the funds will cover the first and second instalments due to participating generation companies that have executed Settlement Agreements, amounting to about N421.42 billion. This represents roughly half of the total negotiated settlement sum under the current phase. Payments will be made through a combination of cash and promissory notes.
The PPSDRP, championed by President Bola Ahmed Tinubu, is designed to resolve over a decade of accumulated arrears in the Nigerian Electricity Supply Industry (NESI), estimated at more than N4 trillion. The debt overhang has constrained liquidity, weakened balance sheets across the value chain and dampened fresh investment in the sector.
The current phase of the programme covers 14 power plants operated by five generation companies for electricity supplied between February 2015 and March 2025. Total negotiated settlements for these firms stand at N827.16 billion, to be paid in four instalments, with the first bond proceeds covering about 50 per cent of the obligation.
Speaking at the signing ceremony in Lagos, the Special Adviser to the President on Energy, Olu Arowolo Verheijen, described the initiative as a significant reset for the electricity market, combining debt resolution with broader structural and financial reforms.
In a post on her verified X handle, Verheijen noted that the Series 1 issuance was executed by NBET Finance Company Plc, a special purpose vehicle of the Nigerian Bulk Electricity Trading (NBET) Plc. Of the N501 billion raised, N300 billion came from capital market investors, while N201 billion was issued directly to participating GenCos in the form of bonds.
She explained that verified receivables for electricity supplied during the period under review are being settled through negotiated agreements. The GenCos that have so far signed Settlement Agreements with NBET include First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited and Niger Delta Power Holding Company Limited.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, represented by the Director-General of the Debt Management Office (DMO), Patience Oniha, said resolving legacy debts in the power sector was a critical step toward unlocking growth.
He noted that structured settlement of outstanding obligations would enable generation companies to stabilise operations, improve maintenance and attract new investment, all of which are essential to improving electricity supply nationwide.
Earlier, Acting Managing Director of NBET, Johnson Akinnawo, said the successful close of the first tranche marked a milestone in implementing the programme. He added that the intervention would significantly improve liquidity across the power value chain and support renewed investment.
Also speaking, Group Managing Director of Sahara Power Group, Kola Adesina, said the settlement process would help restore investor confidence. He disclosed that once the debt resolution process is concluded, work would begin on the second phase of the Egbin Power Plant project.
By addressing historic arrears, the government expects the programme to strengthen the financial position of generation companies, enable them to meet operational and debt service obligations, and unlock fresh capital for capacity expansion. The initiative also emphasises fiscal discipline through verified claims, negotiated settlements and transparent capital market financing.
When fully implemented, the programme is projected to support over 4,483 megawatt-hours of generation capacity and settle payments for more than 290,000 gigawatt-hours of electricity supplied since 2015, providing a more stable foundation for future investment in the sector.
