The Federal Government has raised N501.02 billion from the bond market to settle part of the outstanding debts owed to power generation companies (GenCos), officials said at a bond issuance ceremony in Lagos on Tuesday. The initiative forms part of a structured strategy to address legacy liabilities in the electricity sector.
Nigeria’s power sector has grappled with chronic debt arrears owed by the government to GenCos for more than a decade. These liabilities have weakened liquidity across the value chain and discouraged investment in generation infrastructure, contributing to instability in power supply.
In response, the Federal Government established the Presidential Power Sector Debt Reduction Programme (PPSDRP) to address verified receivables for electricity supplied between February 2015 and March 2025.
Under the programme, government-backed bonds are issued to settle these legacy debts through negotiated settlement agreements with GenCos. The first tranche of bonds raised N501.02 billion and was fully subscribed by institutional investors, pension funds and other market participants.
The N501.02 billion raised comprises two tranches: a N300 billion seven-year Series 1 Tranche A bond and a N201.02 billion seven-year Series 1 Tranche B bond.
Both tranches carry a fixed coupon rate of 17.50 per cent. The bonds were issued by NBET Finance Company Plc, a special purpose vehicle established by the Nigerian Bulk Electricity Trading Plc (NBET) and are fully guaranteed by the Federal Government.
At the ceremony, the Special Adviser on Energy to President Bola Tinubu, Mrs Olu Verheijen, said the bond issuance marks a decisive step in resetting the electricity market by combining debt resolution with broader financial and structural reforms.
She noted that 14 generation companies have executed Full and Final Settlement Agreements with a total negotiated value of about N827 billion.
Verheijen explained that the proceeds from the first bond issuance will fund the first and second instalments of payments to participating GenCos, estimated at N421.42 billion, representing approximately 50 per cent of the total negotiated settlement amount. Payments will be made in a mix of cash and notes under the agreements.
The Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, represented at the event by the Director-General of the Debt Management Office (DMO), Ms Patience Oniha, said resolving the legacy debt issue is critical to improving liquidity, stabilisation of GenCos operations and attracting renewed investment in the power sector.
The bond issuance is intended to restore confidence and liquidity within the electricity value chain, enabling GenCos to stabilise operations, meet maintenance obligations and plan infrastructure expansion.
By settling long-standing arrears, the government aims to improve payment certainty for gas suppliers and strengthen the financial foundations of the sector.
Market analysts said the structured debt resolution approach could encourage further investment in Nigeria’s power infrastructure by reducing the risk associated with historical unpaid receivables.
Enhanced sector confidence may also contribute to broader economic benefits, including improved electricity supply reliability.
The Federal Government’s successful raising of N501.02 billion from the bond market to begin settling legacy debts owed to Generation Companies represents a key milestone in the Presidential Power Sector Debt Reduction Programme.
Officials said the initiative will enhance liquidity, strengthen sector confidence and support long-term reforms aimed at improving Nigeria’s electricity market.
