NIGERIA has raised N501 billion in its first bond issuance dedicated to settling long-standing power sector debts, as the Federal Government moves to tackle payment backlogs that have crippled electricity generation for more than a decade.
The bond, issued under the Presidential Power Sector Debt Reduction Programme, was fully subscribed on Tuesday, attracting pension funds, banks and asset managers, according to Special Adviser to the President on Energy, Ms Olu Arowolo Verheijen. The issuance included N300 billion raised from the capital market and N201 billion in bonds directly allocated to power generation companies.
The programme covers 14 power plants operated by five generation companies, which are owed for electricity supplied between February 2015 and March 2025. Total negotiated settlements amount to N827.16 billion, to be paid in four instalments, with the first tranche funding about 50 percent of the obligations through a mix of cash and promissory notes.
“Capital formation can only come when there is confidence and a clear line of sight in recovering investments previously made,” said Group Managing Director of Sahara Power Group, Mr Kola Adesina. He said once the process was concluded, construction would commence immediately on the second phase of Egbin.
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The settlement involves First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited and Niger Delta Power Holding Company Limited, representing a combined generation capacity of 4,483.60 megawatts per hour. The firms have executed agreements with Nigerian Bulk Electricity Trading Plc (NBET), the government-owned bulk purchaser that accumulated the outstanding debts.
Nigeria’s persistent power shortages have continued to weigh on economic growth, with blackouts remaining widespread despite the country’s vast gas reserves. Generation companies, constrained by unpaid bills, have struggled to maintain infrastructure and secure fuel, worsening the cycle of poor supply and rising liabilities.
Since assuming office in May 2023, President Bola Tinubu’s administration has prioritised electricity reforms alongside the removal of fuel subsidies. The debt settlement scheme is seen as the most concrete attempt yet to restore financial stability to a sector long undermined by weak payment discipline.
CardinalStone Partners Limited acted as lead financial adviser and issuing house for the transaction, in collaboration with NBET. Other institutions involved include the Debt Management Office, Central Bank of Nigeria, National Pensions Commission and the Federal Inland Revenue Service.
Proceeds from Series 1 will fund the first and second instalment payments, estimated at N421.42 billion. Overall, the programme targets the settlement of 290,644.84 gigawatt-hours of electricity billed over the past decade, affecting services delivered to about 12.03 million registered customers.
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“The Federal Government reaffirms its commitment to disciplined implementation of the programme,” Ms Verheijen said at the signing ceremony in Lagos. “We expect more generation companies to participate as part of broader reforms to build a financially sustainable electricity market.”
Authorities say the bond structure introduces a transparent, market-based approach to resolving legacy debts while enforcing fiscal discipline through verified claims. Clearing historic arrears is expected to improve liquidity for power producers, enabling better operations and attracting new investment.
Although Nigeria partially privatised its electricity sector in 2013, the industry has remained troubled by revenue leakages and remittance failures, particularly among distribution companies, leaving NBET unable to fully pay generators.
