FG to Clear Legacy N4trn Power Debt in Phases After Successful Bond Issuance

By Adedapo Adesanya

The federal government will begin to resolve the estimated N4 trillion power sector debt burden as five power generation companies signed settlement agreements.

This will be done under the Presidential Power Sector Debt Reduction Programme, following the issuance of a N501 billion bond.

The bond, which reportedly recorded 100 per cent subscription, was issued in Lagos on Tuesday, attracting interest from pension funds, banks, asset managers, and other institutional investors.

The programme is designed to address payment arrears owed to power generation companies for electricity supplied over the past decade. The legacy debts, according to stakeholders, have constrained liquidity, weakened balance sheets, and discouraged investment across the Nigerian Electricity Supply Industry.

Speaking at the signing ceremony, the Managing Director of the Nigeria Bulk Electricity Trading Plc, Mr Johnson Akinnawo, described the programme as a historic and defining moment for Nigeria’s power sector.

“This historic programme received the resolute approval of President Bola Tinubu and the Federal Executive Council. Mr President’s decisive endorsement is not just a procedural step; it is the bedrock of this ambition. It signals the highest level of commitment to the total revitalisation of our nation’s power sector,” Mr Akinnawo said.

He added that the development would strengthen market discipline while enabling growth across generations and other segments of the electricity value chain.

Mr Akinnawo stressed the broader significance of reliable electricity for national development.

“Reliable electricity is not just an enabler of economic activity. It is the backbone of national development, social advancement, and global competitiveness,” he said.

On her part, the Special Adviser to the President on Energy, Mrs Olu Verheijen, said the bond issuance marked a decisive reset of the electricity market, combining debt resolution with broader financial and structural reforms aimed at restoring confidence and long-term financial sustainability to the sector.

She explained that the inaugural Series 1 Power Sector Bond issuance, executed by NBET Finance Company Plc, closed at N501bn, comprising N300 billion raised from the capital market and N201 billion allotted in bonds to participating power generation companies.

Mrs Verheijen said under the programme, verified receivables for electricity supplied between February 2015 and March 2025 were being settled through negotiated agreements with power generation companies.

She disclosed that five generation companies operating 14 power plants nationwide—First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and the Niger Delta Power Holding Company Limited—have executed settlement agreements with the Nigerian Bulk Electricity Trading (NBET) Plc.

According to her, the total negotiated settlement value for the five companies stands at N827.16 billion and will be paid in four phased instalments.

Proceeds from the Series 1 bond issuance will fund the first and second instalment payments, estimated at N421.42 billion, representing about 50 per cent of the total settlement amount, with payments for the initial phase to be made through a combination of cash and notes.

Mrs Verheijen added that, when fully implemented, the programme is expected to impact 4,483.60 megawatt-hours per hour of electricity generation capacity and finalise settlement of payments for about 290,644.84 gigawatt-hours of electricity billed since February 2015.

She said the initiative would provide a strong foundation for new investments in capacity enhancement and expansion by power generation companies serving over 12.03 million active registered electricity customers nationwide, while reinforcing fiscal discipline through validated claims, negotiated settlements, and transparent capital market financing.