The Federal Government of Nigeria has taken a significant step towards resolving the country’s power sector debt backlog, estimated to be around 4 trillion. As part of the Presidential Power Sector Debt Reduction Programme (PPSDRP), the government has issued a 501 billion inaugural bond, which was fully subscribed by pension funds, banks, asset managers, and other investors.
According to Olu Verheijen, Special Adviser to the President on Energy, this development marks a crucial step towards resolving legacy debts, restoring liquidity, and strengthening confidence in the Nigerian Electricity Supply Industry (NESI). The programme, championed by President Bola Tinubu, aims to address long-standing payment arrears owed to power generation companies, which have constrained liquidity and discouraged investment in the sector for over a decade.
The bond issuance follows the successful completion of Series 1 Power Sector Bond Issuance by NBET Finance Company Plc, with 300 billion raised from the capital markets and 201 billion in bonds allotted to participating power generation companies. Verheijen noted that the programme represents a decisive reset of the electricity market, combining debt resolution with broader financial and structural reforms.
Five power generation companies, representing 14 power plants nationwide, have executed settlement agreements with the Nigerian Bulk Electricity Trading Plc (NBET), with a total negotiated settlement amount of 827.16 billion to be paid in four phased installments. The proceeds from the bond issuance will fund the first and second installment payments to participating power generation companies, estimated at 421.42 billion.
Industry stakeholders believe that by clearing historic arrears, the programme will improve liquidity for power generation companies, strengthen their ability to meet operating and debt obligations, and unlock new investment across the sector. This, in turn, is expected to support more reliable electricity supply to homes and businesses. The programme will impact 4,483.60MWh/h of electricity generation capacity by Nigerian GenCos, effectively finalising settlement of payments for 290,644.84GWhr of electricity billed since February 2015.
The Federal Government has reaffirmed its commitment to disciplined implementation of the programme, which will provide a strong foundation for new investments into capacity enhancement and expansion by companies serving 12.03 million active registered customers across the country. With the successful issuance of the inaugural bond, the government is moving closer to resolving the power sector’s debt backlog and paving the way for a more sustainable and reliable electricity market.
