Federal Government Secures N501bn Bond to Clear Power Sector Arrears

The Federal Government has secured N501.02 billion through bond issuance to begin clearing longstanding debts owed to electricity generation companies, marking a significant step toward addressing over N6 trillion in accumulated liabilities across Nigeria’s power sector.

The financing came through two seven-year bond tranches N300 billion (Series 1 Tranche A) and N201.02 billion (Series 1 Tranche B) both carrying a 17.50 percent interest rate. NBET Finance Company Plc, a special purpose vehicle established by the Nigerian Bulk Electricity Trading Plc (NBET), issued the bonds with full Federal Government backing under the Presidential Power Sector Debt Reduction Programme (PPSDRP).

At the agreement signing ceremony in Lagos, Mrs Olu Verheijen, Special Adviser on Energy to President Bola Tinubu, explained that the initiative aims to resolve accumulated payment arrears to generation companies while restructuring the electricity market.

She noted that the programme addresses verified receivables for power supplied between February 2015 and March 2025 through negotiated settlements. Fourteen generation companies have executed Full and Final Settlement Agreements totaling approximately N827 billion in negotiated value.

Finance Minister and Coordinating Minister of the Economy, Mr Wale Edun, represented by Debt Management Office Director-General Ms Patience Oniha, noted that inherited power sector debts have hindered growth for years, emphasizing that their resolution is essential for meaningful sector transformation.

NBET Acting Managing Director Mr Johnson Akinnawo characterized the bond issuance as a watershed moment that will enhance liquidity throughout the power value chain and encourage fresh investment.

Signatories to the settlement include First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and Niger Delta Power Holding Company Limited, among others.