Nigeria’s Federal Government has moved decisively to tackle the long-standing financial burden choking the country’s electricity market, launching a ₦501 billion local bond as part of a broader plan to settle an estimated ₦4 trillion power sector debt backlog.
The bond, issued under the newly established Presidential Power Sector Debt Reduction Programme (PPSDRP), achieved full subscription, drawing participation from pension fund administrators, commercial banks, asset managers, and other institutional investors. The strong investor response underscores growing confidence in the government’s reform-driven approach to stabilising the Nigerian Electricity Supply Industry (NESI).
In a statement released on Tuesday, the Special Adviser to the President on Energy, Olu Verheijen, described the bond issuance as a pivotal milestone in resolving legacy obligations that have impaired liquidity across the power value chain for more than a decade.
According to Verheijen, the PPSDRP is a flagship initiative of President Bola Ahmed Tinubu, aimed at clearing accumulated payment arrears owed to electricity generation companies (GenCos), which have historically constrained cash flows, weakened balance sheets, and discouraged new investment in generation infrastructure.
She explained that the programme goes beyond debt repayment, representing a structural reset of the electricity market by combining financial clean-up with deeper reforms designed to restore market discipline and investor confidence.
The bond issuance followed the completion of Series 1 Power Sector Bond Issuance by NBET Finance Company Plc, which closed at ₦501 billion. Of this amount, ₦300 billion was raised from the capital market, while ₦201 billion was issued as bonds directly allotted to participating power generation companies, reflecting broad acceptance of the settlement framework.
Under the PPSDRP, verified receivables for electricity supplied between February 2015 and March 2025 are being addressed through negotiated settlement agreements with GenCos. So far, five generation companies—representing 14 power plants nationwide—have executed settlement agreements with the Nigerian Bulk Electricity Trading Plc (NBET).
The companies include First Independent Power Limited (FIPL), Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and the Niger Delta Power Holding Company Limited (NDPHC).
The cumulative value of the negotiated settlements for these firms stands at ₦827.16 billion, to be disbursed in four structured phases. Proceeds from the Series 1 bond issuance will fund the first two instalments, estimated at ₦421.42 billion, representing roughly 50 per cent of the total agreed settlement amount. Payments under this phase will be made using a combination of cash and promissory notes.
Industry players have welcomed the development as a turning point for the sector. Kola Adesina, Group Managing Director of Sahara Power Group, which owns five power plants, said the debt resolution effort restores the confidence required for fresh capital deployment.
“Capital formation thrives on certainty and visibility,” Adesina said. “When outstanding obligations are unresolved, reinvestment becomes difficult. With the President’s commitment to resolving these legacy issues, we are now positioned to move forward. Once this process is concluded, construction will commence immediately on the second phase of the Egbin Power Plant.”
Stakeholders across the industry believe that clearing historical arrears will significantly improve liquidity for GenCos, enhance their ability to meet operational and debt-service obligations, and unlock new investments across generation, transmission, and distribution segments. They also note that the programme reinforces fiscal discipline by relying on validated claims, negotiated settlements, and transparent capital market financing.
Upon full completion, the PPSDRP is expected to impact 4,483.60 MWh/h of electricity generation capacity and finalise settlement for 290,644.84 GWh of electricity supplied since February 2015. The programme is also projected to strengthen the investment outlook for companies serving 12.03 million active registered electricity customers nationwide.
Verheijen disclosed that CardinalStone Partners Limited is leading the consortium of professional advisers on the transaction, serving as Lead Financial Adviser and Lead Issuing House for the Series 1 bond. The firm is working in collaboration with NBET, which acted as transaction sponsor, and the Office of the Special Adviser on Energy, which coordinated negotiations with power generation companies.
Reaffirming the government’s commitment, Verheijen said the Federal Government remains focused on disciplined implementation of the programme and anticipates broader participation from additional GenCos as part of ongoing electricity market reforms.
“Our objective is to build a financially sustainable electricity market capable of supporting Nigeria’s long-term economic growth,” she stated.
