Nigeria Launches ₦4 Trillion Bond Programme to Resolve Power Sector Legacy Debts and Stabilise National Grid
The Federal Government of Nigeria has rolled out a landmark ₦4 trillion bond programme aimed at settling long-standing debts owed to power generation companies (GenCos) and gas suppliers, in a decisive push to restore liquidity, stabilise the national grid, and boost electricity generation capacity.
Approved by President Bola Ahmed Tinubu and endorsed by the Federal Executive Council, the Presidential Power Sector Debt Reduction Programme (PPSDRP) or Presidential Power Sector Financial Reforms Programme targets verified legacy arrears accumulated primarily from February 2015 to March 2025. Following rigorous verification and negotiations, approximately ₦3.3 trillion to ₦3.48 trillion has been agreed as full and final settlement with stakeholders.
The initiative, executed primarily through the Nigerian Bulk Electricity Trading Plc (NBET), involves issuing government-backed bonds in tranches to clear obligations, improve balance sheets across the value chain, and rebuild investor confidence in the Nigerian Electricity Supply Industry (NESI).
Key Milestones and Implementation
• First Tranche Success: In January 2026, the inaugural ₦501 billion Series 1 bond was fully subscribed (100%) by pension funds, banks, asset managers, and other institutional investors. Proceeds have begun disbursement, with significant payments already made (e.g., over ₦223 billion reported in early updates).
• Settlements: Eight to 15 GenCos, covering 15–17 power plants (including major players like Transcorp, Egbin, and Geregu), have signed agreements worth around ₦2.3 trillion. Engagements continue with additional companies.
• Next Steps: A second tranche of approximately ₦730 billion is planned for 2026 to address remaining verified debts.
Special Adviser to the President on Energy, Olu Verheijen, described the programme as a critical intervention to break the cycle of payment arrears that have undermined generation and grid stability. The bonds convert legacy, often doubtful debts into tradable, government-guaranteed instruments, providing immediate liquidity to GenCos and gas suppliers while enabling them to meet operational and investment needs.
Broader Objectives and Impact
The debt resolution forms a core pillar of wider power sector reforms under the Renewed Hope Agenda. These include tariff discipline, targeted subsidies, metering expansion, and infrastructure upgrades. By addressing liquidity constraints, the programme aims to enhance plant availability, reduce reliance on expensive alternative power sources, and unlock private sector investment essential for scaling generation capacity beyond current levels that struggle to meet national demand.
Experts view the strong market response to the first bond as a vote of confidence in the government’s reform commitment. However, stakeholders note that while the financial reset provides vital short-term relief, sustained improvements will require addressing structural issues such as collection efficiency, transmission bottlenecks, and governance in the sector.
This bold fiscal intervention signals the Tinubu administration’s determination to tackle one of Nigeria’s most persistent infrastructure challenges, with expectations of improved power supply reliability and economic dividends in the coming years. Implementation continues under the joint oversight of the Ministries of Finance and Power.
