The Federal Government of Nigeria has executed a successful issuance of a ₦501 billion inaugural bond under the Presidential Power Sector Debt Reduction Programme (PPSDRP). This move garnered a full subscription from pension funds, banks, asset managers, and other investors, marking a significant stride in addressing historical debts, boosting liquidity, and enhancing confidence within the Nigerian Electricity Supply Industry (NESI).
Championed by President Bola Tinubu, this initiative seeks to resolve persistent payment delays owed to power generation firms that have hampered liquidity, weakened financial standings, and deterred investments across the entire power sector for over a decade.
During the bond issuance signing held in Lagos on January 27, Special Adviser to the President on Energy, Olu Verheijen, remarked that this programme signifies a critical reset for the electricity market, merging debt resolution with broader financial and structural reforms.
The signing follows the successful completion of Series 1 Power Sector Bond Issuance by NBET Finance Company Plc, which closed at ₦501 billion. This amount includes ₦300 billion sourced from capital markets and ₦201 billion allocated as bonds to participating power generation companies, reflecting a robust investor confidence in the outlined reform agenda.
The program undertakes the settlement of verified receivables for electricity supplied between February 2015 and March 2025 through negotiated agreements with power generation companies.
To date, five power generation firms representing fourteen power plants across Nigeria—First Independent Power Limited (FIPL), Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and Niger Delta Power Holding Company Limited (NDPHC)—have signed Settlement Agreements with the Nigerian Bulk Electricity Trading Plc (NBET). The total negotiated settlement amount for these firms is ₦827.16 billion, planned for payment in four phased instalments.
Proceeds from the Series 1 issuance will support the first and second installment payments to participating power generation companies with signed Settlement Agreements, estimated at ₦421.42 billion, corresponding to about 50 percent of the total negotiated settlement amount. Payments for this initial phase will involve a combination of cash and notes.
Kola Adesina, group managing director of Sahara Power Group, highlighted that confidence is fundamental to capital formation. He emphasized the challenges faced previously due to outstanding debts but expressed optimism about resuming construction on the second phase of the Egbin Power Plant, attributing this renewed commitment to President Tinubu's focus on resolving legacy issues.
By clearing historical debts, this program is expected to enhance liquidity for power generation companies, bolster their capacity to meet operational and debt commitments, catalyze new investments within the sector, and assure a more reliable electricity supply for homes and businesses. Furthermore, it promotes fiscal discipline through validated claims, negotiated settlements, and transparent capital market financing.
Once finalized, the programme is projected to significantly impact the electricity generation capacity of Nigerian GenCos by 4,483.60MWh/h, completing the payment settlements for 290,644.84GWhr of electricity billed since February 2015 and laying a solid foundation for new investments in capacity building and expansion serving 12.03 million active registered consumers nationwide.
The Special Adviser to the President on Energy acknowledged President Tinubu's visionary leadership, along with support from the Honourable Minister of Finance, Wale Edun, and the Honourable Minister of Power, Adebayo Adelabu, for making the PPSDRP viable.
She lauded the efforts of the Presidential Power Sector Debt Reduction Committee members and key stakeholders in the power sector, including government agencies like the Debt Management Office, Central Bank of Nigeria, and the National Pensions Commission, for their roles in facilitating enhancements for the Bond Issue.
CardinalStone Partners Limited, a prominent investment banking firm in Nigeria, acted as the Lead Financial Adviser and Lead Issuing House in successfully executing the Series 1 Bond Issue, collaborating closely with the Nigerian Bulk Electricity Trading Plc (NBET), which sponsored the transaction, and the Office of the Special Adviser on Energy responsible for the settlement negotiations with the Generation Companies.
Ms. Verheijen affirmed the Federal Government's ongoing commitment to meticulously implementing the Programme and expressed anticipation for the participation of additional power generation companies, as part of broader reforms focused on creating a financially sustainable electricity market that can drive Nigeria's long-term economic growth.
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