The Federal Government of Nigeria has achieved full subscription of its inaugural N501 billion power sector bond issued under the Presidential Power Sector Debt Reduction Programme, marking a significant milestone in efforts to restore liquidity, clear long-standing arrears, and rebuild investor trust in the Nigerian Electricity Supply Industry (NESI).
The Debt Management Office (DMO), in collaboration with NBET Finance Company Plc, confirmed the successful closure of the Series 1 Power Sector Bond on January 28, 2026. The bond comprised N300 billion raised through public subscription in the capital market and N201 billion allotted directly to participating generation companies (GenCos) as part of negotiated settlement agreements. The total issuance of N501 billion was fully taken up, reflecting strong demand from institutional investors, pension funds, asset managers, commercial banks, and other market participants.
The bond issuance forms a core component of the Presidential Power Sector Debt Reduction Programme, initiated to address verified legacy debts owed to power generation companies for electricity supplied between February 2015 and March 2025. Officials emphasized that the programme aims to resolve liquidity constraints that have hampered generation capacity, fuel supply, maintenance, and overall sector viability for years.
According to the DMO and the Nigerian Bulk Electricity Trading Plc (NBET), five power generation companies have so far executed formal settlement agreements with NBET. The total negotiated settlement amount under these agreements stands at N827.16 billion. The N501 billion bond proceeds will fund the first and second instalments of these settlements, estimated at approximately N421.42 billion—representing roughly half of the verified claims.
The settlement structure combines cash payments and tradable financial instruments, designed to provide immediate liquidity relief to GenCos while spreading fiscal obligations over time. By clearing historic arrears, the government expects to strengthen the balance sheets of generation companies, enabling them to meet operational expenses, service existing debts, procure gas, and undertake critical maintenance and upgrades.
The programme is projected to support an increase in available generation capacity—currently averaging over 4,400 megawatt-hours per hour—and improve service delivery to more than 12 million registered electricity customers nationwide. Enhanced liquidity is also expected to attract new private investment into generation, transmission, and distribution, addressing chronic under-recovery, tariff shortfalls, and infrastructure deficits that have plagued the sector since privatization in 2013.
The successful bond subscription underscores renewed investor confidence in the power sector reforms under President Bola Ahmed Tinubu’s administration. Market analysts attributed the full uptake to several factors:
- Transparent validation of legacy debts through forensic audits and stakeholder negotiations;
- Government backing and structured repayment assurances;
- Attractive yields relative to prevailing fixed-income instruments;
- Alignment with broader fiscal discipline goals, including reduced reliance on Ways and Means advances and improved cash flow management in the sector.
The DMO had earlier in January 2026 successfully closed other domestic debt instruments, including a January FGN Savings Bond subscription and a FGN bond sale that recorded N1.54 trillion in allotments against a N900 billion offer, demonstrating robust domestic capital market appetite for government securities.
Industry stakeholders welcomed the development. The Association of Power Generation Companies (APGC) described the bond closure as “a critical step toward restoring financial health and operational stability in the generation sub-sector.” Power sector experts noted that resolving legacy debts would reduce the risk of further supply disruptions, improve gas-to-power arrangements, and support the government’s target of achieving 30:30:30 (30 GW by 2030, 30% renewable energy mix, and 30% reduction in carbon intensity).
The Presidential Power Sector Debt Reduction Programme is part of a wider set of reforms that include:
Sustained tariff reviews to reflect cost-reflective pricing;
- Strengthening of regulatory oversight by the Nigerian Electricity Regulatory Commission (NERC);
- Acceleration of privatization of underperforming distribution companies;
- Promotion of renewable energy integration and off-grid solutions;
- Enhanced metering and loss-reduction initiatives.
While the bond issuance addresses a significant portion of verified legacy debts, the government has indicated that additional phases and instruments may be deployed to cover remaining validated claims under the programme. The full implementation of the settlement agreements is expected to be monitored closely by the DMO, NBET, and the Ministry of Power, with regular progress reports to stakeholders.
The successful subscription of the N501 billion power sector bond is viewed as a positive signal to both domestic and international investors that Nigeria’s power sector reforms are gaining traction. Analysts anticipate that improved sector liquidity could pave the way for renewed private-sector participation, increased generation output, and more reliable electricity supply—key requirements for economic growth, industrialization, and improved quality of life for millions of Nigerians.
