Dear Readers,
Nigeria’s electricity market has now reached a defining moment. In a landmark move aimed at restoring confidence and financial stability in the sector, the Federal Government has successfully issued a ₦501 billion inaugural power sector bond under the Presidential Power Sector Debt Reduction Programme (PPSDRP), championed by President Bola Ahmed Tinubu.
The successful Series 1 Power Sector Bond Issuance was executed by NBET Finance Company Plc., a Special Purpose Vehicle (SPV) established by the Nigerian Bulk Electricity Trading Plc (NBET). More importantly, it represents a deliberate effort to tackle one of the electricity sector’s most persistent challenges, which is the longstanding arrears owed to power Generation Companies (GenCos), which have for years limited liquidity and discouraged new investment in the market.
For more than a decade, the Federal Government accumulated unpaid obligations of approximately ₦1.3 trillion to GenCos, a situation that significantly constrained liquidity, discouraged new investments, and weakened the overall value chain of the Nigerian Electricity Supply Industry (NESI). In August 2024, the Government began addressing this challenge with a ₦205 billion partial settlement, setting the stage for a more structured and comprehensive debt resolution strategy under the PPSDRP.
Under the PPSDRP, verified receivables for electricity supplied between February 2015 and March 2025 will be settled through negotiated agreements with GenCos. The total negotiated settlement amount stands at ₦827.16 billion, to be paid in four instalments. This intervention is expected to reverse years of underinvestment caused by payment uncertainty and restore financial discipline across the market.
The proceeds from the Series 1 bond issuance will fund the first and second instalment payments to GenCos that have executed Settlement Agreements. Five power generation companies, which are First Independent Power Limited (FIPL), Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and Niger Delta Power Holding Company Limited (NDPHC) will benefit in this initial phase. Significantly, the bond achieved 100% subscription, attracting institutional investors such as pension funds, banks, and asset managers, a strong signal of renewed confidence in the sector.
When fully implemented, the Programme is expected to improve liquidity for GenCos, strengthen their ability to meet operating and debt obligations, and unlock fresh investment across the electricity value chain. It will impact 4,483.60 MWh/h of generation capacity, finalise settlement for 290,644.84 GWh of electricity billed since February 2015, and lay the groundwork for capacity expansion and improved service delivery to approximately 12.03 million active registered electricity customers nationwide.
Reaffirming the Federal Government’s commitment, Ms. Verheijen, Special Adviser to the President on Energy, noted that disciplined implementation remains a priority and expressed optimism about broader participation by other GenCos. According to her, these reforms are part of a wider strategy to build a financially sustainable electricity market capable of supporting Nigeria’s long-term economic growth.
While debt settlement is central to the Programme, it exists alongside broader structural reforms. In 2024, the Minister of Power, Mr. Adebayo Adelabu, repeatedly emphasised the urgent need to modernise Nigeria’s power infrastructure and reassess the existing tariff framework. He also highlighted the country’s severe metering gap, noting that out of more than 12 million electricity customers, only slightly above five million were metered, leaving over seven million consumers without meters.
By 2026, tangible progress has emerged. The Minister announced the free distribution of electricity meters to Nigerian consumers, explaining that the meters were obtained at no cost through the World Bank-funded Distribution Sector Recovery Programme and must therefore be installed free of charge for consumers. Any attempt to demand payment from consumers, he warned, would constitute an offence. However, this policy has generated concerns among Distribution Companies (DisCos), particularly regarding the cost of meter installation, as installers are not typically DisCos staff and the question of who bears installation costs remains unresolved.
As the Federal Government drives disciplined implementation of the PPSDRP and Nigeria moves toward a more reliable power sector, can these initiatives finally bridge the gap between policy ambition and market reality, and fully resolve the longstanding arrears still owed to GenCos?
