Nigeria’s government-backed electricity trader, Nigerian Bulk Electricity Trading Plc (NBET), has raised N501.02 billion ($1.2 billion) in a bond issuance aimed at settling decade-long debts owed to power generation companies (GenCos), marking the first tranche under a broader N4 trillion Presidential Power Sector Debt Reduction Programme (PPSDRP).
The Series 1 bond, issued through NBET Finance Company Plc, a bankruptcy-remote special purpose vehicle, is fully guaranteed by the federal government. It is structured in two tranches: N300 billion 7-year Series 1 Tranche A and N201.02 billion 7-year Series 1 Tranche B, both carrying a 17.50 percent coupon. The proceeds will fund the first phase of settlements with GenCos, covering roughly 50 percent of agreed arrears.
Officials described the move as a “decisive reset” for a market long hindered by unpaid obligations, liquidity shortfalls, and investor anxiety. Verified receivables for electricity supplied between February 2015 and March 2025 have been negotiated with 14 GenCos, totaling about N827 billion.
“Resolving legacy debts is not optional; it is critical to unlocking growth in the sector,” said Patience Oniha, representing Finance Minister Wale Edun at the bond signing.
The issuance comes against a backdrop of persistent structural gaps in Nigeria’s power sector. Since the 2013 privatization, electricity tariffs have been below cost-reflective levels, and federal subsidy disbursements have historically lagged budgeted amounts. Industry data show that between May and October 2025, GenCos issued invoices totaling N1.531 trillion but received only N547.37 billion, leaving N984.3 billion pending as subsidies. By year-end, arrears across the system exceeded N6 trillion, straining GenCos’ finances, stalling expansion projects, and disrupting gas supply chains.
NBET’s Acting Managing Director, Johnson Akinnawo, described the successful issuance as a milestone in restoring liquidity, stabilizing operations, and renewing investor confidence. The bonds are eligible for investment by pension fund administrators and qualify for Central Bank of Nigeria liquidity support, aligning with market-based financing principles rather than direct fiscal intervention.
The settlement deals already cover five GenCos and 14 plants nationwide, including First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and Niger Delta Power Holding Company Limited, owners of 10 plants.
Generation companies have emphasized the broader impact on investment. Kola Adesina, which owns five plants including Egbin Power Plant, said the debt resolution clears the path for the second phase of Egbin’s expansion, potentially adding significant megawatts to the grid. “Once this process is over, construction will commence immediately,” he said, highlighting how financial certainty could unlock stalled projects.
Analysts note that Nigeria often generates below installed capacity due to gas supply constraints, transmission bottlenecks, and liquidity shortages. By improving cash flow, the bond could enable GenCos to pay suppliers promptly, maintain plants effectively, and increase available output without new construction.
The administration and energy advisers emphasize that debt clearance is only one pillar of a broader reform agenda. Olu Verheijen stressed that structural changes, such as better market transparency, enforcement of remittance discipline, transmission upgrades, and explicit, cash-backed subsidy allocations, are essential to prevent recurrence of arrears.
For consumers, benefits may be gradual, depending on how quickly increased liquidity translates into operational stability across generation, transmission, and distribution segments. If paired with ongoing reforms, the intervention could reduce system collapses, improve plant availability, and encourage new generation projects over time.
While the bond does not eliminate all structural challenges, it represents a strategic use of capital markets to address entrenched financial gaps in the power sector. The federal government aims to shift the market from a subsidy-dependent model to a commercially viable ecosystem, using transparent, guaranteed debt instruments to restore confidence and facilitate investment.
The issuance was formally announced on March 13, 2026, with officials noting that the move could serve as a blueprint for future debt resolutions in infrastructure-heavy sectors.