The Federal Government has successfully recorded a 100 per cent subscription for its N501 billion inaugural power sector bond issued under the Presidential Power Sector Debt Reduction Programme (PPSDRP), a development that signals renewed investor confidence in Nigeria’s electricity market reforms.
The milestone was disclosed on Tuesday by the Special Adviser to the President on Energy, Mrs. Olu Arowolo Verheijen, in a statement shared via X (formerly Twitter). According to her, the full subscription underscores growing market trust in the government’s strategy to resolve long-standing liquidity challenges that have weighed down the Nigerian Electricity Supply Industry (NESI) for over a decade.
The bond issuance is designed to address accumulated payment arrears owed to power generation companies, restore liquidity across the value chain, and strengthen the financial sustainability of the power sector. Persistent debt overhang has historically constrained generation capacity, discouraged new investments, and weakened the balance sheets of key industry players.
The N501 billion Series 1 Power Sector Bond was issued by NBET Finance Company Plc and closed at full subscription, with N300 billion raised from the capital markets and N201 billion issued directly to participating generation companies. The transaction represents the first phase of a broader government plan to issue up to N4 trillion in bonds to settle legacy debts owed to electricity generation companies and gas suppliers.
Mrs. Verheijen described the PPSDRP as a decisive reset of Nigeria’s electricity market, combining debt resolution with broader financial and structural reforms. She noted that clearing historical arrears is critical to rebuilding confidence, improving sector governance, and unlocking private capital required for long-term expansion and reliability.
Industry stakeholders have welcomed the development. Group Managing Director of Sahara Power Group, Mr. Kola Adesina, said sustainable capital formation in the power sector can only occur when investors have confidence in the recovery of previously committed funds. He added that following the settlement process, construction would commence immediately on the second phase of Sahara Power’s Egbin Power Plant, signalling how improved liquidity could translate into tangible capacity expansion.
Under the PPSDRP framework, verified receivables for electricity supplied between February 2015 and March 2025 are being settled through negotiated agreements with generation companies. Five power generation firms — First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and Niger Delta Power Holding Company Limited — have already executed settlement agreements with Nigerian Bulk Electricity Trading Plc (NBET).
The negotiated settlement value for the five companies stands at N827.16 billion, to be paid in four phased instalments. Proceeds from the Series 1 bond will fund the first and second instalments, estimated at N421.42 billion, representing about half of the total settlement. Payments will be made through a combination of cash and promissory notes, easing immediate liquidity pressures on the companies.
By clearing historic debts, the programme is expected to significantly strengthen the balance sheets of generation companies, improve their ability to meet operating and debt obligations, and enhance overall sector performance. The initiative is projected to impact 4,483.60 megawatt-hours per hour of generation capacity and finalise settlement for 290,644.84 gigawatt-hours of electricity billed since 2015. It is also expected to benefit companies serving about 12.03 million active registered electricity customers nationwide.
While concerns have been raised in some quarters about potential debt-for-debt risks, the Federal Government insists the bond-backed strategy reinforces fiscal discipline through validated claims, negotiated settlements, and transparent capital market financing. Officials maintain that the reforms will stabilise the power sector, improve electricity supply, and support long-term economic growth.
Emmanuel Bassey is a Financial Expert that has worked in the Banking and Finance Industry for over 15+ years across different banks in Nigeria
