The Federal Government raised NOK 501 billion from domestic capital markets under the Presidential Power Sector Financial Reform Programme, and Africa Finance Corporation advised on the transaction. The bond issue is the first part of a planned N4 trillion plan aimed at resolving long-term debt that has weighed down Nigeria’s power industry for more than a decade.
The issuance is aimed at settling confirmed arrears owed to power generation companies for electricity supplied from February 2015 to March 2025. These outstanding debts are causing persistent liquidity stress across the power sector. These limit the ability of power generation companies to repay loans, maintain assets and invest in new generation capacity.
Africa Finance Corporation acted as joint financial advisor along with CardinalStone Partners. The program is being implemented through NBET Finance Company Plc, a special purpose vehicle of Nigerian Bulk Electric Trading Plc. Oversight will be provided by the President’s Power Sector Debt Reduction Commission, with technical leadership provided by the Office of the President’s Special Advisor on Energy.
Proceeds from the bond issue will be used to extinguish legacy debt owed to power generation companies. This is expected to strengthen GenCos’ balance sheet and improve cash flow. The government believes this will reduce systemic risk in the electricity market and reduce pressure on banks with exposure to the sector.
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For years, underpayments and delayed remittances have undermined the financial health of the power industry. Many power generation companies have relied on short-term borrowing to continue operations. Some have had critical maintenance postponed, resulting in frequent outages and capacity limitations.
The transaction received strong support from domestic institutional investors. Pension fund managers accounted for approximately 50% of the total membership. Market participants say this reflects growing confidence in policy-backed infrastructure products and the search for long-term naira assets by pension funds.
Those involved in the program say the bond issuance is not a standalone intervention. This forms part of a broader reset of Nigeria’s electricity market. This reform combines debt resolution with financial discipline and structural changes across the value chain.
Once fully completed, this warranty program will cover approximately 5,398 megawatts of generation capacity. This completes the settlement of more than 290,000 gigawatt hours of electricity billed since 2015. The impact will be felt throughout the company, which supplies electricity to approximately 12 million registered customers nationwide.
This effort also complements continued investments in transmission infrastructure and consumer meter acceleration. The government is promoting a gradual transition to bilateral electricity trading between wholesale trading partners. Pricing based on this framework is expected to better reflect market realities.
Together, these measures aim to correct deep-rooted fiscal distortions in the power sector. Policymakers believe that more liquid and commercially viable electricity markets are essential to support industrial expansion, job creation, and long-term economic growth.
