Nigeria Issues First Power Sector Bond To Clear Legacy Electricity Debts

Nigeria has taken an important step to fix long-standing financial problems in its power sector by issuing its first-ever power sector bond worth ₦501 billion. The bond has been launched under the Presidential Power Sector Debt Reduction Programme and is aimed at stabilizing the country’s struggling electricity market. This move signals a strong commitment by the federal government to address deep-rooted issues that have affected power generation and supply for many years.

The bond received a strong response from the market and was fully subscribed, showing high investor confidence. Pension funds, commercial banks, and asset management firms participated in the issuance, reflecting trust in the government’s ongoing power sector reforms. The programme is being implemented through NBET Finance Company Plc, a special purpose vehicle created to manage the financial process and ensure transparency in the settlement of dues.

One of the main objectives of this bond is to clear the “legacy debts” that have weighed down the Nigerian Electricity Supply Industry for more than a decade. Power generation companies have struggled financially because they were not fully paid for the electricity supplied to the national grid. These unpaid bills created cash flow problems, limiting the ability of power producers to maintain their plants or invest in upgrades. Under this initiative, verified arrears owed to generation companies for the period between 2015 and 2025 will be settled.

Several major power producers, including Geregu Power and Niger Delta Power Holding Company, have already signed agreements to take part in the programme. The total amount to be paid to the first group of participating companies is estimated at more than ₦827 billion. Payments will be made in phases, and the funds raised through this first bond will cover the first two installments.

Experts in the power sector believe that settling these debts could lead to a much-needed reset of the electricity market. With improved cash flow, power generation companies will be better positioned to carry out maintenance, repair aging equipment, and increase generation capacity. This could help reduce frequent power outages and improve the reliability of the electricity supply across the country.

The successful bond issuance also highlights Nigeria’s ability to use its domestic capital market to fund critical infrastructure. Instead of relying only on direct government spending, this approach brings in private investment through structured financing. Analysts say this could create a more sustainable financial base for the power sector and support long-term improvements in electricity generation and distribution.