…Signals reset of electricity market
The Federal Government has raised ₦501 billion in a fully-subscribed inaugural power sector bond, marking President Bola Tinubu’s most decisive move yet to resolve decade-long payment arrears that have crippled electricity generation and investment.
Issued under the Presidential Power-Sector Debt Reduction Programme (PPSDRP), the Series-1 bond combines ₦300 billion raised from the capital market, with ₦201 billion allotted to power generation companies (GenCos). The proceeds will fund about half of verified debts owed for electricity supplied between February 2015 and March 2025, officials said at a signing ceremony in Lagos last Tuesday.
Five GenCos operating 14 power plants—First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited and Niger Delta Power Holding Company—have signed settlement agreements with the Nigerian Bulk Electricity Trading Plc (NBET). Their total negotiated claims stand at ₦827.16 billion, to be paid in four instalments, with Series-1 covering the first and second tranches estimated at ₦421.42 billion through a mix of cash and notes.
The settlement affects 4,483.60 megawatts of generation capacity and closes the books on 290,644.84 gigawatt-hours billed over the past decade, impacting electricity supply to about 12.03 million registered customers nationwide.
Special Adviser to the President on Energy, Olu Verheijen, described the bond as a “major reset” of the electricity market, pairing debt resolution with broader financial and structural reforms. “Capital formation can only come when there is confidence and a clear line of sight to recovering past investments”, she said.
Industry leaders say the move could unlock stalled expansion. Kola Adesina, Group Managing Director of Sahara Power Group, which operates the 1,320MW Egbin plant among others, said construction on Egbin’s second phase would begin once the settlement process is concluded.
The bond – arranged with CardinalStone Partners as Lead Adviser and supported by the Debt Management Office (DMO), CBN, PenCom and the Federal Inland Revenue Service (now Internal Revenue Service, IRS) – forms part of a wider ₦4 trillion multi-instrument plan to restore liquidity, enforce payment discipline and attract new investment to a sector long plagued by defaults following partial privatisation in 2013.
More tranches are expected as additional verified claims are settled, with authorities betting that clearing legacy debts will help end chronic blackouts and revive growth in Africa’s largest economy.
