Nigeria has taken a major step toward stabilising its troubled electricity sector after raising ₦501 billion through its first bond issuance dedicated to clearing long-standing power sector debts. The initiative forms part of President Bola Tinubu’s Renewed Hope Agenda to resolve payment arrears that have constrained electricity generation for more than a decade.
Akahi News gathered that the bond issuance, executed under the Presidential Power Sector Debt Reduction Programme, achieved full subscription, attracting participation from pension funds, commercial banks, and asset managers. The transaction comprised ₦300 billion sourced from the capital market and ₦201 billion in bonds allocated directly to power generation companies.
The development was disclosed by the President’s Special Adviser on Energy, Olu Arowolo Verheijen, during the programme’s signing ceremony in Lagos.
14 Power Plants to Benefit from Debt Settlement
According to details obtained by Akahi News, the programme targets 14 power plants operated by five generation companies that are owed for electricity supplied between February 2015 and March 2025.
The affected companies include:
- First Independent Power Limited
- Geregu Power Plc
- Ibom Power Company Limited
- Mabon Limited
- Niger Delta Power Holding Company Limited
Together, the firms represent about 4,483.60 megawatts per hour of installed generation capacity.
Negotiated settlements stand at ₦827.16 billion, payable in four instalments. Proceeds from the first bond tranche are expected to fund about 50 per cent of the obligations through a mix of cash payments and promissory notes.
These companies have executed settlement agreements with Nigerian Bulk Electricity Trading Plc (NBET), the government-owned bulk purchaser that accumulated the debts due to remittance challenges within the electricity market.
Restoring Investor Confidence and Power Expansion
Speaking on the significance of the intervention, Kola Adesina, Group Managing Director of Sahara Power Group, said the programme would restore investor confidence and unlock stalled investments.
“Capital formation can only come when there is confidence and a clear pathway to recovering investments previously made. Once this process is completed, construction will commence immediately on the second phase of our Egbin Power Plant,” he said.
Akahi News learnt that the Egbin facility alone has a capacity of 1,320 megawatts and remains one of Nigeria’s largest power plants.
Industry analysts believe that improved liquidity for generation companies will enable them to maintain equipment, secure fuel supplies, and attract fresh investments needed to expand electricity output nationwide.
Tackling Nigeria’s Chronic Power Deficit
Nigeria’s electricity sector has struggled with chronic underinvestment, frequent blackouts, and weak payment discipline since the partial privatisation of the market in 2013. While generation and distribution assets were sold to private operators, transmission remained under government control.
Distribution companies often fail to remit collections fully to NBET, leaving the bulk trader unable to pay generation companies, thereby creating a cycle of mounting debts and declining generation capacity.
Akahi News gathered that the Tinubu administration, which assumed office in May 2023, has prioritised power sector reforms alongside subsidy removals and fiscal restructuring, positioning electricity as a cornerstone of economic recovery and industrial growth.
The debt resolution programme is widely regarded as the most concrete intervention so far to restore financial discipline and market confidence in the sector.
Institutional Support and Financial Structure
CardinalStone Partners Limited served as the lead financial adviser and issuing house for the bond transaction, with NBET acting as programme sponsor. The issuance was supported by the Debt Management Office, the Central Bank of Nigeria, the National Pensions Commission, and the Nigerian Revenue Service.
Series 1 proceeds will fund the first and second instalments estimated at ₦421.42 billion. Overall, the programme targets the settlement of 290,644.84 gigawatt hours of electricity billed over the past decade, affecting service delivery to more than 12 million registered electricity customers.
Verheijen reaffirmed the Federal Government’s commitment to disciplined implementation, noting that additional power generation companies are expected to join subsequent tranches.
Market Discipline and Long-Term Reform Outlook
The bond structure introduces a market-based mechanism for debt resolution while enforcing fiscal discipline through validated claims and transparent financing.
By clearing historic arrears, authorities expect improved liquidity across the electricity value chain, enabling generation companies to meet operating obligations, expand capacity, and stabilise supply.
Akahi News learnt that the programme aligns with broader reforms, including tariff adjustments and efforts to improve collection efficiency among distribution companies.
Finance Minister Wale Edun and Power Minister Adebayo Adelabu reportedly supported the initiative, which required coordination across multiple regulatory and financial institutions.
Economic analysts caution, however, that while the debt settlement signals strong intent, sustained implementation, transparency, and infrastructure upgrades will determine whether Nigerians ultimately experience reliable power supply and reduced blackout frequency.
Hope for Sustainable Electricity Market
With three more instalments planned to complete the ₦827.16 billion settlement framework, stakeholders are optimistic that Nigeria’s electricity market may finally begin to regain financial stability.
Akahi News gathered that if the reforms are consistently implemented, the programme could unlock billions in private investment, strengthen grid reliability, reduce operating costs for businesses, and improve the quality of life for millions of households.
As Nigeria continues its economic reform journey, the power sector remains central to productivity, job creation, and long-term national competitiveness.
By Joseph Iyaji | Akahi News
Joseph Iyaji is a journalist, educator, and founder of Akahi G. International, Akahi Tutors, and Akahi News. Read more about him here.
Akahi News www.akahinews.org
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