The federal government on Tuesday, January 27, moved to tackle the estimated ₦4 trillion debt backlog in the power sector as five power generation companies signed settlement agreements under the Presidential Power Sector Debt Reduction Programme (PPSDRP).
The government also issued a ₦501 billion inaugural bond, fully subscribed by pension funds, banks, asset managers, and other investors, to fund the debt resolution.
In a statement, Olu Verheijen, special adviser to the president on energy, described the development as a significant step towards resolving legacy debts, restoring liquidity, and boosting confidence in the Nigerian Electricity Supply Industry (NESI).
The programme, championed by president Bola Tinubu, aims to address long-standing payment arrears owed to power generation companies, which over the past decade have strained liquidity, weakened balance sheets, and discouraged investment across the power sector.
Speaking at the bond signing ceremony in Lagos, Verheijen said the programme represents a reset of the electricity market, combining debt resolution with broader financial and structural reforms.
The Series 1 bond issuance, executed by NBET Finance Company Plc, raised ₦501 billion ₦300 billion from capital markets and ₦201 billion allocated to participating generation companies reflecting strong investor confidence in the reform agenda.
Under the programme, verified receivables for electricity supplied between February 2015 and March 2025 are being settled through negotiated agreements.
The five companies that have signed settlement agreements with NBET First Independent Power Limited, Geregu Power Plc, Ibom Power Company, Mabon Limited, and Niger Delta Power Holding Company represent 14 power plants nationwide, with a total negotiated settlement of ₦827.16 billion, payable in four installments.
Proceeds from the Series 1 bond will fund the first two installment payments, totaling ₦421.42 billion, using a combination of cash and notes.
Kola Adesina, Group Managing Director (MD) of Sahara Power Group, highlighted that clearing legacy debts would restore investor confidence, unlock new capital for expansion, and allow construction on new projects, such as the second phase of the Egbin Power Plant, to begin immediately.
Industry observers noted that settling historic arrears will strengthen liquidity, improve operational efficiency, encourage new investment, and support more reliable electricity supply.
It also promotes fiscal discipline through validated claims, negotiated settlements, and transparent financing.
Once complete, the programme will affect 4,483.60 MWh/h of electricity generation capacity, settling payments for 290,644.84 GWh of electricity billed since February 2015.
The initiative also provides a solid foundation for capacity expansion, benefiting 12.03 million active registered customers nationwide.
CardinalStone Partners Limited leads the consortium managing the transaction, with NBET acting as sponsor.
Verheijen reaffirmed the government’s commitment to disciplined implementation and encouraged participation from other power generation companies as part of broader reforms aimed at building a financially sustainable electricity market capable of supporting Nigeria’s long-term economic growth.
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