By Chinedu Okafor, African CEO Magazine
Nigeria has embarked on a bold initiative to tackle its long-standing electricity sector debt, unveiling a US$2.8 billion (₦4 trillion) settlement programme that promises to reshape the country’s energy landscape.
On Tuesday, five generation companies (GenCos) signed repayment agreements under the Presidential Power Sector Debt Reduction Programme, a federal initiative backed by a newly issued bond. The move signals a decisive step toward restoring liquidity and investor confidence in Nigeria’s electricity market.
A Bond-Financed Reset
The programme follows the issuance of a ₦501 billion (US$355 million) Series 1 Power Sector Bond, fully subscribed by institutional investors including pension funds, banks, and asset managers. Officials say the strong uptake reflects renewed confidence in the government’s reform agenda.
Johnson Akinnawo, Managing Director of the Nigerian Bulk Electricity Trading Plc (NBET), described the initiative as a turning point:
“This programme has received the full backing of President Bola Tinubu and the Federal Executive Council. That endorsement signals a firm commitment to revitalising Nigeria’s power sector and restoring market discipline.”
Debt Resolution and Market Reform
Special Adviser to the President on Energy, Olu Verheijen, noted that the bond issuance represents more than debt settlement—it marks a structural reset for the electricity market.
The Series 1 issuance, executed by NBET Finance Company Plc, raised ₦300 billion (US$213 million) from the capital market, while ₦201 billion (US$142 million) was allocated directly to participating GenCos.
The programme covers verified receivables for electricity supplied between February 2015 and March 2025, with settlement agreements negotiated individually with generation firms.
The First Movers
Five companies operating 14 power plants have signed agreements so far:
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First Independent Power Limited
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Geregu Power Plc
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Ibom Power Company Limited
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Mabon Limited
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Niger Delta Power Holding Company Limited
Together, they account for a negotiated settlement value of ₦827.16 billion (US$587 million), to be paid in four instalments. The first two phases, worth ₦421.42 billion (US$299 million), will be funded through a mix of cash and promissory notes.
Industry Impact
Executives say clearing the arrears will unlock new investment and strengthen balance sheets across the sector.
Kola Adesina, Group Managing Director of Sahara Power Group, emphasised the importance of investor confidence:
“Capital formation depends on confidence and the ability to recover investments already made. Once this process is completed, construction will begin immediately on the second phase of our Egbin Power Plant.”
When fully implemented, the programme will support 4,483.6 megawatt-hours per hour of generation capacity and settle payments for approximately 290,645 gigawatt-hours of electricity billed since 2015.
Institutional Backing
The federal government acknowledged the support of the Ministry of Finance, Ministry of Power, Debt Management Office, Central Bank of Nigeria, National Pensions Commission, and Federal Inland Revenue Service in facilitating the bond issuance.
CardinalStone Partners Limited acted as lead financial adviser and issuing house, while NBET served as transaction sponsor.
Finance Minister Wale Edun, represented by Debt Management Office Director-General Patience Oniha, framed the bond issuance as a milestone:
“This goes beyond a financing transaction. It reflects the government’s commitment to honouring its obligations, restoring liquidity and confidence, and laying the groundwork for a more sustainable electricity market.”
