Nigeria raises N501bn from domestic bonds to settle power sector debts, improve liquidity, and boost investor confidence in the electricity market

Nigeria’s Federal Government has raised N501.02 billion from the domestic bond market to address long-standing payment arrears in the electricity sector and begin settling debts owed to power generation companies (GenCos).

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The funds were raised through two seven-year bond tranches issued by NBET Finance Company Plc, a special purpose vehicle of the Nigerian Bulk Electricity Trading Plc (NBET).

The issuance comprises a N300 billion Series 1 Tranche A bond and a N201.02 billion Series 1 Tranche B bond, both priced at 17.50 per cent and fully guaranteed by the Federal Government.

The bond issuance forms part of the Presidential Power Sector Debt Reduction Programme (PPSDRP), designed to reduce accumulated liabilities in the electricity industry, estimated at over N6 trillion, and restore confidence across the power value chain.

Under the programme, verified receivables for electricity supplied between February 2015 and March 2025 are being settled through negotiated agreements with generation companies.

To date, 14 GenCos have executed Full and Final Settlement Agreements, representing a combined value of approximately N827 billion.

Proceeds from the Series 1 bonds are expected to fund first and second instalment payments to participating GenCos, amounting to N421.42 billion about 50 per cent of the total negotiated settlement value through a combination of cash and promissory notes.

Energy sector officials said the initiative is intended not only to clear historical arrears but also to reset the electricity market by improving liquidity, reinforcing market discipline, and creating a sustainable framework for future investments.

The Ministry of Finance noted that unresolved legacy debts have constrained growth and reform in the power sector for years, stressing that addressing these obligations is critical to achieving broader economic and energy sector goals.

NBET officials described the bond transaction as a milestone likely to stabilise electricity supply, boost investor confidence, and support infrastructure expansion across the sector.

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Generation companies that have signed on to the settlement programme include First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and Niger Delta Power Holding Company Limited.