Nigeria’s Federal Government has taken a major step toward addressing long-standing payment arrears in the electricity sector, raising N501.02 billion from the domestic bond market to begin settling debts owed to power generation companies (GenCos).
The funds were mobilised 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), an initiative aimed at reducing accumulated liabilities in the electricity industry, estimated at over N6 trillion, and restoring 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, with a combined negotiated value of approximately N827 billion.
Proceeds from the Series 1 bonds are expected to fund first and second instalment payments to participating GenCos, estimated at N421.42 billion. This represents about 50 per cent of the total negotiated settlement value, with payments to be made through a combination of cash and promissory notes.
Energy sector officials say the initiative is designed not only to clear historical arrears but also to reset the electricity market by improving liquidity, strengthening market discipline and creating a more sustainable framework for future investments.
The Ministry of Finance has acknowledged that unresolved legacy debts have constrained growth and reform in the power sector for years, noting that addressing these obligations is critical to achieving broader economic and energy sector objectives.
NBET officials described the bond transaction as a significant milestone, noting that improved cash flow to GenCos is expected to stabilise electricity supply, enhance investor confidence and support infrastructure expansion across the sector.
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, among others.