Stable Power in Sight as FG Clears N501bn Electricity Debt, Boosts Investor Confidence
- Nigerian government has raised N501 billion to address historic debts in the electricity sector
- the bond issuance aims to restore confidence and unlock investments in troubled power market
- The settlement programme could improve electricity service delivery for over 12 million customers
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Nigeria’s long-troubled electricity sector could be on the cusp of stability after the Federal Government raised N501 billion in its first bond issuance dedicated to settling historic power sector debts.
The bond, issued under the Presidential Power Sector Debt Reduction Programme, achieved full subscription and marks the most concrete step yet by the Bola Tinubu administration to resolve payment arrears that have crippled electricity generation for more than a decade.
Source: Getty Images
The inaugural tranche closed on Tuesday, January 27, 2026, attracting strong participation from pension funds, banks and asset managers, according to the President’s special adviser on Energy, Olu Arowolo Verheijen.
How the bond was structured
The issuance consisted of N300 billion raised from the capital market and an additional N201 billion in bonds allocated directly to power generation companies.
The programme targets 14 power plants operated by five generation firms owed for electricity supplied between February 2015 and March 2025.
Total negotiated settlements across the companies stand at N827.16 billion, payable in four instalments.
Proceeds from the first tranche will fund roughly half of the outstanding obligations through a mix of cash payments and promissory notes.
Series 1 alone is expected to cover the first and second instalment payments estimated at N421.42 billion.
Power firms welcome the settlement
Industry players say the settlement could finally unlock stalled investments and restore confidence in Nigeria’s electricity market.
“Capital formation can only come when there is confidence and a clear line of sight to recovering investments already made,” said Kola Adesina, group managing director of Sahara Power Group, which operates five plants, including the 1,320-megawatt Egbin Power Station.
He added that once the settlement process is completed, construction would commence immediately on the second phase of the Egbin plant.
The beneficiaries include First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited and the Niger Delta Power Holding Company, representing a combined generation capacity of 4,483.60 megawatts per hour.
Tackling a decade of power sector dysfunction
Nigeria’s chronic electricity shortages have constrained economic growth in Africa’s most populous country, where routine blackouts persist despite vast gas reserves. For years, generation companies struggled to maintain plants and secure fuel due to unpaid invoices, creating a vicious cycle of declining output and mounting debts.
The Tinubu administration, which assumed office in May 2023, has made electricity reform a central pillar of its economic agenda, alongside fuel subsidy removal and broader fiscal restructuring.
Officials say the debt programme is designed to restore financial discipline through validated claims, transparent financing and market-based debt resolution.
What it means for consumers and investors
Authorities expect the clearance of historic arrears to improve liquidity for generation companies, strengthen operations and attract fresh investment into the sector.
Ultimately, the programme aims to settle receivables tied to over 290,000 gigawatt hours of electricity supplied over the past decade, impacting service delivery to more than 12 million registered customers.
CardinalStone Partners served as lead adviser, working alongside Nigerian Bulk Electricity Trading Plc, the Debt Management Office, the Central Bank and other regulators.
Source: UGC
With three more instalments planned, officials believe sustained implementation could finally lay the groundwork for a financially viable electricity market and fewer blackouts nationwide.
FG proposes N30bn for Solar mini-grids
Legit.ng earlier reported that The federal government has proposed spending about N30.34 billion on solar mini-grids, inverters and related renewable energy solutions for ministries, departments and agencies (MDAs) in the 2026 budget, Daily Trust reported.
According to an analysis of the proposed budget, the funds are meant to provide alternative power for government facilities, schools and some communities across the country, as Nigeria continues to face frequent power outages and repeated collapses of the national electricity grid.
The breakdown shows that the State House is the single largest spender, with a proposal of N7 billion for a solar mini-grid to electrify key infrastructure within the seat of power.
Source: Legit.ng
