Dear Readers,
Nigeria’s efforts to restore financial stability in its electricity sector have entered a new phase. Following the successful issuance of the ₦501 billion Series I bond, the Federal Government on 21 July 2026 announced plans to raise a further ₦729 billion Series II bond under the Presidential Power Sector Debt Reduction Programme (PPSDRP) – the next leg of a strategy to resolve verified legacy liabilities in the Nigerian Electricity Supply Industry (NESI), restore market liquidity and rebuild investor confidence. The Series II offer is scheduled to open on 3 August 2026 and will run for ten business days, closing on 14 August 2026, with funding targeted for 24 August 2026, subject to regulatory approvals and market conditions.
This second tranche follows the successful deployment of ₦501 billion under the maiden Series I issuance in early 2026. Structured as a lease-based financing arrangement, Series I comprised ₦300 billion raised from the capital market and ₦201 billion issued as non-cash instruments directly to eligible GenCos and their gas suppliers. Under that phase, approximately ₦333 billion was disbursed to eight GenCos operating 17 power plants, with all participating companies paid in accordance with their settlement agreements. Critically, the first coupon payment of approximately ₦63.5 billion on the seven-year instrument was settled in full and on schedule on 14 July 2026, materially strengthening market confidence ahead of the second issuance.
The PPSDRP forms a central pillar of the Federal Government’s wider electricity market reforms, which seek to address the protracted liquidity crisis that has constrained investment, weakened market discipline and undermined operational efficiency across the NESI. Although the Federal Executive Council approved a settlement ceiling of ₦4 trillion in August 2025 for debts accrued between February 2015 and March 2025, a rigorous line-by-line verification of claims against actual service delivery subsequently reduced verified obligations to approximately ₦3.3 trillion. This verification process underscores a deliberate policy choice to settle only legitimate and validated claims.
The proposed ₦729 billion Series II issuance constitutes the next phase of this verified resolution strategy. CardinalStone Partners, Lead Financial Adviser, indicated that approximately ₦400 billion will be raised from investors through a book-building process, while the balance of ₦329 billion will be issued as non-cash instruments to eligible beneficiaries. The proceeds will support the settlement of further verified obligations to GenCos, gas suppliers and service providers, hopefully improving liquidity throughout the value chain, and enhancing plant availability, reducing system disturbances, and strengthening the sector’s overall financial sustainability.
Together, the ₦501 billion Series I and the proposed ₦729 billion Series II issuances amount to approximately ₦1.23 trillion and represent the first phase of the Federal Government’s Capital Market Multi-Instrument Issuance Programme. However, while the proposed ₦729 billion Series II Bond marks another important milestone in the Federal Government’s efforts to restore liquidity across the NESI, it also underscores a more pressing reality: debt resolution alone cannot guarantee a financially sustainable electricity market. Even as legacy liabilities are being retired through innovative capital market interventions, fresh payment obligations from April 2025 till date continue to accumulate under the sector’s existing market structure. GenCos remain constrained by persistent shortfalls, while mounting indebtedness has increasingly compelled gas suppliers to curtail gas supplies to power plants, further weakening electricity generation and perpetuating the liquidity crisis the PPSDRP seeks to resolve.
The true success of the PPSDRP will therefore not be measured solely by the quantum of historical debt extinguished, but by its ability to catalyse the structural reforms necessary to prevent a recurrence of the very liabilities it is designed to eliminate. If Nigeria is to break the paradox of being one of Africa’s largest gas reserve holders while continuing to struggle with inadequate gas supply for domestic power generation, greater attention must be paid to the underlying structural challenges that continue to undermine the gas-to-power value chain. These include persistent market illiquidity, inadequate cost-reflective tariffs, weak payment discipline, transmission constraints, underinvestment in critical gas and electricity infrastructure, and the commercial uncertainties that continue to deter long-term private investment.
The PPSDRP should therefore be viewed not as the culmination of the Federal Government’s liquidity restoration efforts, but as an important foundation upon which broader commercial, regulatory, and institutional reforms must be built. We believe that unless the structural causes of NESI’s liquidity crisis are addressed by reforms that create a commercially viable electricity market with the same urgency as is being applied currently to its legacy debts, there remains a genuine risk that today’s financial intervention will simply make room for tomorrow’s liabilities.
