The Federal Government has taken a major step toward addressing Nigeria’s estimated N4 trillion power sector debt, with five power generation companies (GenCos) signing settlement agreements under the Presidential Power Sector Debt Reduction Programme, following the issuance of a N501 billion bond.
The bond, issued in Lagos on Tuesday, reportedly achieved 100% subscription, drawing strong interest from pension funds, banks, asset managers, and other institutional investors. Analysts say the response signals renewed confidence in the government’s electricity market reforms and its approach to resolving long-standing sector challenges.
The programme, championed by President Bola Tinubu, aims to clear payment arrears owed to GenCos for electricity supplied over the past decade. According to The PUNCH, these legacy debts had previously limited liquidity, weakened balance sheets, and discouraged private investment in the Nigerian Electricity Supply Industry (NESI).
At the signing ceremony, Johnson Akinnawo, Managing Director of the Nigeria Bulk Electricity Trading Plc (NBET), described the programme as a historic moment for Nigeria’s power sector.
“This programme has the full backing of President Tinubu and the Federal Executive Council. It is more than a procedural step—it is the foundation for the total revitalisation of our nation’s electricity market,” Akinnawo said.
He added that clearing the arrears would strengthen market discipline, enable growth across the electricity value chain, and reinforce the role of reliable power as a driver of economic development.
The Special Adviser to the President on Energy, Olu Verheijen, said the bond issuance represents a decisive reset of the electricity market, combining debt resolution with structural reforms designed to restore long-term financial sustainability and investor confidence.
The Series 1 Power Sector Bond, executed by NBET Finance Company Plc, closed at N501 billion—comprising N300 billion raised from the capital market and N201 billion allocated to participating GenCos.
Under the programme, verified receivables for electricity supplied between February 2015 and March 2025 are being settled through negotiated agreements. The five GenCos involved—First Independent Power Limited, Geregu Power Plc, Ibom Power Company, Mabon Limited, and Niger Delta Power Holding Company—operate 14 power plants nationwide. The total settlement value for these companies is N827.16 billion, to be paid in four phased instalments.
Proceeds from the Series 1 bond will fund the first two instalments, amounting to N421.42 billion, representing roughly 50% of the total settlement. Payments will be made through a combination of cash and notes.
Industry leaders welcomed the development, noting that clearing legacy arrears would improve liquidity, enable GenCos to meet operating and debt obligations, and unlock new investment.
Kola Adesina, Group Managing Director of Sahara Power Group, said:
“Resolving these legacy debts restores confidence and allows power producers to reinvest. With the President’s commitment, construction on the second phase of our Egbin Power Plant will commence immediately.”
Verheijen highlighted that the programme, when fully implemented, is expected to impact 4,483.60 megawatts per hour of generation capacity and settle payments for approximately 290,644.84 gigawatt-hours of electricity supplied since February 2015.
She added that the initiative provides a strong foundation for capacity expansion and investment, benefiting more than 12.03 million active registered electricity customers, while reinforcing fiscal discipline through validated claims, negotiated settlements, and transparent capital market financing.
The Federal Government credited the success of the bond issuance to collaboration among key institutions, including the Debt Management Office, Central Bank of Nigeria, National Pensions Commission, Nigerian Revenue Service, and the Presidential Power Sector Debt Reduction Committee. CardinalStone Partners Limited served as lead financial adviser and issuing house, with NBET as transaction sponsor.
Representing the Minister of Finance, Patience Oniha of the Debt Management Office described the signing as more than a financing exercise, calling it a critical turning point for Nigeria’s power sector.
“This ceremony marks a decisive step in addressing structural challenges, restoring liquidity and confidence, and creating a stronger foundation for long-term sustainability,” she said.
Oniha emphasised that settling legacy debts in a structured manner will allow GenCos to stabilise operations, maintain infrastructure, and attract new investment, ultimately improving electricity supply across Nigeria.
