Fed. govt’s ₦501 billion power sector Bond records 100% subscription
• Stakeholders hail President Tinubu on initiative
• Programme to stimulate economy

The Federal Government has successfully issued a ₦501 billion inaugural bond under the Presidential Power Sector Debt Reduction Programme (PPSDRP), recording 100 per cent subscription from pension funds, banks, asset managers and other investors. It also marked a significant step towards resolving legacy debts, restoring liquidity and strengthening confidence in the Nigerian Electricity Supply Industry (NESI).

The initiative is designed to address long-standing payment arrears owed to power generation companies, which for over a decade constrained liquidity, weakened balance sheets and discouraged investment across the power sector value chain.

The signing follows the successful completion of Series 1 Power Sector Bond Issuance by Nigeria Bulk Electricity Trading (NBET) Finance Company Plc. Series 1 issuance closed at ₦501 billion, comprising ₦300 billion raised from the capital markets and ₦201 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 14 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 NBET. The total negotiated settlement amount for these companies stands at ₦827.16 billion, to be paid in four phased instalments.

Proceeds from Series 1 issuance will fund the first and second instalment payments to participating power generation companies with signed Settlement Agreements, estimated at ₦421.42 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.

When completed, the programme will impact 4,483.60MWh/h of electricity generation capacity by 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 12.03mn active registered customers across the country.

Speaking at the bond issuance signing ceremony which held at the Grand African Ballroom, Lagos Continental Hotel, Victoria Island, Lagos, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the ceremony marks a critical turning point in the collective efforts to address long-standing structural challenges in Nigeria’s power sector and to lay a stronger foundation for its long-term sustainability.

Edun, who was represented by the Director-General, Debt Management Office, Patience Oniha, explained that for many years, legacy debts owed to Generation Companies (GenCos) have constrained liquidity across the electricity value chain, weakening balance sheets, discouraged investment and ultimately limited the sector’s ability to deliver reliable power to Nigerian homes and businesses.

According to the Minister, the Federal Government recognised that resolving these legacy issues was not optional but essential, giving rise to the Presidential Power Sector Debt Reduction Programme (PPSDRP) and subsequently to the ₦4 trillion Power Sector Multi-Instrument Issuance Programme, designed as a structured, credible, and fiscally responsible mechanism for settling these obligations.

“This transaction sends a clear and reassuring signal to the power sector and to the wider economy that the Federal Government is committed to honouring its obligations. We are prepared to deploy innovative financial solutions to resolve systemic challenges and we remain focused on restoring liquidity, confidence, and discipline across the electricity market. 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,” Edun said.

He disclosed that the programme is anchored on strong governance, transparency and fiscal prudence. The Ministry of Finance, working closely with NBET and other stakeholders, remains committed to ensuring that this initiative supports sector reform while safeguarding macroeconomic stability.

Edun was emphatic that a sustainable power sector is not just an energy objective, but an economic imperative because reliable electricity underpins industrial growth, job creation, and improved quality of life for millions of Nigerians.

In similar vein, 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.

She noted that the country’s electricity sector has been constrained not by lack of demand or installed capacity, but by unresolved legacy liabilities and chronic liquidity shortfalls. Those pressures, she argued, weakened balance sheets across the value chain, constrained gas supply, reduced plant availability and ultimately limited the pace at which electricity could be delivered reliably to homes and businesses.

Aware of this, Verheijen said the President Bola Tinubu administration conviction of having a viable power sector led to the establishment of the Presidential Power Sector Debt Reduction Programme, chaired by the Minister of Finance/Coordinating Minister of the Economy and technically led by her office.

“This Programme was not conceived as a bailout. It is a balance-sheet reset. Its purpose is straightforward: to clear verified legacy obligations, restore liquidity, and re-establish the conditions under which operators can plan, operate, and invest on commercial terms. Over the past several months, we have worked closely with the Ministry of Finance, NBET, NERC, and power generation companies to reconcile claims and negotiate settlements based strictly on verified obligations. Today’s signing marks the outcome of that process.

“Fourteen generation companies have executed Full and Final Settlement Agreements, with a total negotiated value of approximately ₦827 billion. These agreements reflect discipline, compromise, and a shared commitment to closing the chapter on legacy arrears,” Verheijen said.

Therefore, she said, resolving these liabilities restores liquidity across the value chain, strengthens payment certainty for gas suppliers and creates the financial headroom required for operators to stabilise assets, improve availability and plan new investment.

Also speaking at the signing ceremony, the NBET Managing Director, Johnson Akinnawo, described the programme as a historic and defining moment for Nigeria’s power sector.

“This historic programme received the resolute approval of President Bola Tinubu and the Federal Executive Council. Mr. President’s decisive endorsement is not just a procedural step; it is the bedrock of this ambition. It signals the highest level of commitment to the total revitalisation of our nation’s power sector,” Akinnawo said, adding that the development would strengthen market disciplines while enabling growth across generation and the other segments of the electricity value chain.

Akinnawo stressed the broader significance of reliable electricity for national development, saying, “Reliable electricity is not just an enabler of economic activity. It is the backbone of national development, social advancement and global competitiveness.”

The Group Managing Director, Sahara Power Group, Kola Adesina, who’s conglomerate owns five power plants, 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 in 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.
CardinalStone Partners Limited, an Investment banking firm, led the consortium of appointed professional parties as Lead Financial Adviser and Lead Issuing House to successfully execute the Series 1 Bond Issue, working closely with NBET that acted as Sponsor on the Transaction, and the Office of the Special Adviser on Energy that led the settlement negotiations and engagements with the Generation Companies.