Federal Gov’t Raises N501bn Bond, Settles N421.42bn Power Sector Debts

The federal government on Tuesday announced the successful inaugural auction of N501 billion in bonds, with proceeds earmarked to clear inherited debts crippling the power sector.

The offer, which drew 100 per cent subscription from institutional investors, was issued under the Presidential Power Sector Debt Reduction Programme (PPSDRP).

It recorded full subscription from pension funds, banks, asset managers and other investors, marking a significant step towards resolving legacy debts, restoring liquidity, and strengthening confidence in the Nigerian Electricity Supply Industry (NESI).

The government stated that proceeds from the Series 1 issuance would fund the first and second installment payments to participating power generation companies with signed Settlement Agreements, estimated at N421.42 billion, representing approximately 50 per cent of the total negotiated settlement amount.

The payment for this initial phase will be made through a mix of cash and notes.

The programme, championed by President Bola Ahmed Tinubu, is designed to address long-standing payment arrears owed to power generation companies, put at over N4 trillion, which for over a decade constrained liquidity, weakened balance sheets and discouraged investment across the power sector value chain.

The programme targets 14 power plants operated by five generation companies owed for electricity supplied between February 2015 and March 2025.

Total negotiated settlements stand at N827.16 billion, payable in four instalments, with the first bond proceeds funding approximately 50 per cent of obligations through a combination of cash and notes.

Speaking at the bond issuance signing ceremony in Lagos on Tuesday, the special adviser to the president on energy, Olu Arowolo Verheijen, stated that the programme represents a decisive reset of the electricity market, combining debt resolution with broader financial and structural reforms.

In a post on her verified X handle, Verheijen said the signing follows the successful completion of Series 1 Power Sector Bond Issuance by Nigeria Bulk Electricity Trading Company (NBET) Finance Company Plc. Series 1 issuance closed at N501 billion, comprising N300 billion raised from the capital markets and N201 billion in bonds allotted to participating power generation companies, reflecting strong investor confidence in the reform agenda.

Under the programme, 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 fourteen 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 N827.16 billion, to be paid in four phased installments.

The minister of finance and coordinating minister of the economy,  Wale Edun, acknowledged that the legacy debts owed by the federal government have constrained growth of the power sector for many years.

Represented by the director general, Debt Management Office (DMO), Patience Oniha, Edun noted that resolving the debt issue was not optional but a critical step to grow the sector.

“By settling legacy debts in a structured manner, we are enabling generation companies to stabilise operations, improve maintenance, and attract new investment — all of which are critical to improving power supply nationwide”, he added.

Speaking earlier, the acting managing director of NBET,  Johnson Akinnawo pointed out that the successful completion of the first tranche marked a milestone in the implementation of the programme.

“The successful close of the N501 billion bond represents a major step forward in resolving the longstanding challenge that has constrained the power sector for years. This intervention will significantly improve liquidity across the value chain, enable operators to stabilize their operations and support renewed investment in the Nigerian power sector”, he stated.

The generation companies which signed the deal with the government include First Independent Power Limited (FIPL), Geregu Power Plc, Ibom Power Company Limited, Mabon Limited and Niger Delta Power Holding Company Limited (NDPHC).).

Speaking at the event, the group managing director of Sahara Power Group, which owns five power plants, Kola Adesina, 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 were being 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.”

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.

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 and providing 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 to the president on energy Olu Arowolo Verheijen praised the leadership of President Bola Ahmed Tinubu, as well as the support from the  minister of finance and coordinating minister of the Economy,  Wale Edun, and the  minister of Power, Adebayo Adelabu, in making the PPSDRP a reality.

She further acknowledged the support of all members of the Presidential Power Sector Debt Reduction Committee who played vital roles in making this capital raise a success, all key power sector stakeholders as well as government authorities, including the Debt Management Office, Central Bank of Nigeria, the National Pensions Commission, and the Nigerian Revenue Service, among others which facilitated enhancements for the Bond Issue.