The Federal Government has taken a major step towards resolving Nigeria’s estimated N4tn power sector debt burden as five power generation companies (GenCos) signed settlement agreements under the Presidential Power Sector Debt Reduction Programme, following the issuance of a N501bn bond.
The bond, which reportedly recorded 100 per cent subscription, was issued in Lagos on Tuesday and attracted strong interest from pension funds, banks, asset managers, and other institutional investors. The successful outing is seen as a sign of renewed confidence in the Federal Government’s electricity market reforms and its strategy for addressing long-standing challenges in the sector.
The programme, driven by President Bola Tinubu, is designed to settle payment arrears owed to power generation companies for electricity supplied over the past decade. These legacy debts have constrained liquidity, weakened balance sheets, and discouraged investment across the Nigerian Electricity Supply Industry.
Speaking at the signing ceremony, the Managing Director of the Nigeria Bulk Electricity Trading Plc (NBET), Johnson Akinnawo, described the initiative as a historic and defining moment for Nigeria’s power sector.
“This historic programme received the resolute approval of President Bola Tinubu and the Federal Executive Council. Mr President’s decisive endorsement is not just a procedural step; it is the bedrock of this ambition. It signals the highest level of commitment to the total revitalisation of our nation’s power sector,” Akinnawo said.
He added that the programme would strengthen market discipline and enable growth across power generation and other segments of the electricity value chain. Akinnawo further stressed the importance of reliable electricity to national development, noting that it remains the backbone of economic growth, social advancement, and global competitiveness.
The Special Adviser to the President on Energy, Olu Verheijen, said the bond issuance marked a decisive reset of the electricity market by combining debt resolution with broader financial and structural reforms aimed at restoring confidence and ensuring long-term sustainability.
She explained that the inaugural Series 1 Power Sector Bond issuance, executed by NBET Finance Company Plc, closed at N501bn, comprising N300bn raised from the capital market and N201bn allotted in bonds to participating GenCos.
Verheijen disclosed that verified receivables for electricity supplied between February 2015 and March 2025 are being settled through negotiated agreements. She noted that five generation companies operating 14 power plants nationwide—First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and the Niger Delta Power Holding Company Limited—have already executed settlement agreements with NBET.
According to her, the total negotiated settlement value for the five companies stands at N827.16bn and will be paid in four phased instalments. Proceeds from the Series 1 bond will fund the first and second instalments, estimated at N421.42bn, representing about 50 per cent of the total settlement amount. Payments in the initial phase will be made through a combination of cash and notes.
Industry operators say clearing the historic arrears will improve liquidity for GenCos, strengthen their ability to meet operational and debt obligations, and unlock new investments across the electricity value chain.
The Group Managing Director of Sahara Power Group, Kola Adesina, said resolving legacy debts would restore confidence and enable power producers to reinvest in capacity expansion.
“Capital formation can only come when there is confidence and a clear line of sight for recovering investments. Because we were owed so much, it was difficult to put in more money. But based on President Bola Tinubu’s commitment to resolving these legacy issues, I can say that once this process is completed, construction will commence immediately on the second phase of our Egbin Power Plant,” Adesina said.
Verheijen added that, when fully implemented, the programme is expected to impact 4,483.60 megawatt-hours per hour of electricity generation capacity and finalise settlement for about 290,644.84 gigawatt-hours of electricity billed since February 2015.
She said the initiative would lay a strong foundation for new investments in capacity enhancement and expansion by power generation companies serving over 12.03 million active registered electricity customers nationwide, while reinforcing fiscal discipline through validated claims, negotiated settlements, and transparent capital market financing.
The Federal Government also acknowledged the roles played by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, the Minister of Power, Adebayo Adelabu, and members of the Presidential Power Sector Debt Reduction Committee, alongside key institutions such as the Debt Management Office, the Central Bank of Nigeria, the National Pensions Commission, and the Nigerian Revenue Service.
Represented by the Director-General of the Debt Management Office, Patience Oniha, the Minister of Finance described the signing as more than a financing transaction, calling it a critical turning point for the power sector.
“This ceremony represents far more than a financing transaction. It marks a critical turning point in our collective efforts to address long-standing structural challenges in Nigeria’s power sector and to lay a stronger foundation for its long-term sustainability,” he said.
Edun added that the bond issuance demonstrates the Federal Government’s commitment to honouring its obligations, restoring liquidity and confidence, and improving power supply nationwide through structured and transparent debt resolution.
