The Federal Government has commenced the settlement of Nigeria’s long-standing power sector debt, estimated at about ₦4 trillion, following the signing of repayment agreements with five electricity generation companies (GenCos).
The move comes after the successful issuance of a ₦501 billion Power Sector Bond under the Presidential Power Sector Debt Reduction Programme.
The bond, which achieved full subscription, attracted participation from pension funds, banks, asset managers, and other institutional investors, signalling renewed confidence in reforms within the electricity market.
The debt resolution initiative, approved by President Bola Tinubu and the Federal Executive Council, is aimed at clearing unpaid obligations owed to power producers for electricity supplied over the last decade.
These arrears have historically strained liquidity across the Nigerian Electricity Supply Industry, weakening operators’ balance sheets and discouraging new investment.
Speaking at the signing ceremony, the Managing Director of the Nigerian Bulk Electricity Trading Plc (NBET), Johnson Akinnawo, described the programme as a turning point for the power sector. He said the government’s backing demonstrated a strong commitment to restoring stability and discipline in the electricity market.
Akinnawo noted that addressing legacy debts would not only strengthen the financial health of generation companies but also support growth across the entire power value chain, stressing that reliable electricity remains critical to economic development and national competitiveness.
The Special Adviser to the President on Energy, Olu Verheijen, said the bond issuance represents a reset of Nigeria’s electricity market, combining debt settlement with broader financial and structural reforms to ensure long-term sustainability.
According to her, the Series 1 bond issuance was executed through NBET Finance Company Plc and closed at ₦501 billion, made up of ₦300 billion raised from the capital market and ₦201 billion issued as bonds to participating GenCos.
Verheijen explained that the programme covers verified receivables for electricity supplied between February 2015 and March 2025. Five generation companies operating 14 power plants across the country have so far signed settlement agreements. The companies include First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and the Niger Delta Power Holding Company Limited.
She disclosed that the negotiated settlement for the five firms amounts to ₦827.16 billion, to be paid in four phases. Proceeds from the bond will finance the first two instalments, valued at about ₦421.42 billion, representing roughly half of the total agreed amount.
Industry stakeholders have welcomed the development, noting that clearing the debts is expected to improve liquidity, enhance operational capacity, and unlock new investments in power generation.
The Group Managing Director of Sahara Power Group, Kola Adesina, said resolving the arrears would restore investor confidence and allow power producers to reinvest in infrastructure. He revealed that expansion work on the second phase of the Egbin Power Plant would commence once the settlement process is completed.
Verheijen added that, when fully implemented, the programme is expected to affect over 4,400 megawatts of generation capacity and conclude payment for electricity supplied over nearly a decade. She said the initiative would also support future investments and improve service delivery for more than 12 million registered electricity customers nationwide.
The Federal Government acknowledged the roles played by key institutions, including the Ministry of Finance, Ministry of Power, Debt Management Office, Central Bank of Nigeria, and National Pensions Commission, in facilitating the bond issuance.
Representing the Minister of Finance, the Director-General of the Debt Management Office, Patience Oniha, described the bond signing as a major milestone, noting that it reflects the government’s commitment to meeting its obligations, restoring market confidence, and addressing deep-rooted structural challenges in the power sector.
