N501bn Bond: FG Begins N4trn Power Sector Debt Settlement
With a N501 billion over-subscribed local bond, the Federal Government of Nigeria (FG) has taken steps towards resolving an estimated ₦4 trillion power sector debt backlog.
The government has also issued a ₦501 billion inaugural bond under the Presidential Power Sector Debt Reduction Programme (PPSDRP), recording 100% subscription from pension funds, banks, asset managers, and other investors.
A Tuesday statement by the Special Adviser to the President on Energy, Olu Verheijen, noted that the development marked a significant step towards resolving legacy debts, restoring liquidity, and strengthening confidence in the Nigerian Electricity Supply Industry (NESI).
The Programme, championed by President Bola Tinubu, is designed to address long-standing payment arrears owed to power generation companies, which for over a decade constrained liquidity, weakened balance sheets, and discouraged investment across the power sector value chain.
Speaking at the bond issuance signing ceremony in Lagos on Thursday, Verheijen stated that the Programme represents a decisive reset of the electricity market, combining debt resolution with broader financial and structural reforms.
The signing followed the successful completion of Series 1 Power Sector Bond Issuance by NBET Finance Company Plc.
According to her, Series 1 issuance closed at ₦501 billion, comprising ₦300 billion raised from the capital markets and ₦201 billion in bonds allotted to participating power generation companies, reflecting strong investor confidence in the reform agenda.
Under the Programme, she noted that verified receivables for electricity supplied between February 2015 and March 2025 are being settled through negotiated agreements with power generation companies.
To date, five power generation companies representing 14 power plants nationwide, First Independent Power Limited (FIPL), Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and Niger Delta Power Holding Company Limited (NDPHC), have executed Settlement Agreements with the Nigerian Bulk Electricity Trading Plc (NBET).
The total negotiated settlement amount for these companies stands at ₦827.16 billion, to be paid in four phased installments.
Verheijen stated that proceeds from Series 1 issuance will fund the first and second installment payments to participating power generation companies with signed Settlement Agreements, estimated at ₦421.42 billion, representing approximately 50% of the total negotiated settlement amount.
The payment for this initial phase will be made through a mix of cash and notes. Kola Adesina, Group Managing Director of Sahara Power Group, which owns five power plants, said, “Capital formation can only come when there is confidence, when you can truly see a line of sight in recovering investments previously made.
“Because we owed so much, it was a bit of a problem for us to put in more money.
“But last year, we took the bull by the horns, based on President Bola Ahmed Tinubu’s commitment to resolving the legacy issues, and I can say that once this process is over, construction will commence immediately on the second phase of our Egbin Power Plant. On behalf of the Generation Companies, I’d like to thank the President for this resolution.”
Industry stakeholders noted that by clearing historic arrears, the Programme is expected to improve liquidity for power generation companies, strengthen their ability to meet operating and debt obligations, unlock new investment across the sector, and support more reliable electricity supply to homes and businesses.
According to them, it also reinforces fiscal discipline through validated claims, negotiated settlements, and transparent capital market financing.
When completed, 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 programme will also provide a strong foundation for new investments into capacity enhancement and expansion by companies serving 12.03 million active registered customers across the country.
The Special Adviser noted that CardinalStone Partners Limited is leading the consortium of appointed professional parties, while Lead Financial Adviser and Lead Issuing House will execute the Series 1 Bond Issue.
According to her, the company is working closely with the Nigerian Bulk Electricity Trading Plc (NBET), which acted as Sponsor on the Transaction, and the Office of the Special Adviser on Energy that led the settlement negotiations and engagements with the Generation Companies.
Speaking on the deal, Verheijen said, “The Federal Government reaffirms its commitment to disciplined implementation of the Programme, and we look forward to the participation of other power generation companies, as part of our broader reforms aimed at building a financially sustainable electricity market that is capable of supporting Nigeria’s long-term economic growth.” Fidelity Bank, Access Drive Momentum, Investors Gain N126bn
