The Federal Government has successfully issued a N501 billion inaugural bond under the Presidential Power Sector Debt Reduction Programme (PPSDRP), resulting in 100% subscription from pension funds, banks, asset managers and other investors.
The PPSDRP is designed by the government to help in partly offsetting the long-standing debt it owed power generation companies (GenCos), which for the past years had constrained liquidity in the power sector, weakened balance sheets of the operators and discouraged investment across the power sector value chain.
Speaking at the bond issuance signing ceremony on Tuesday in Lagos, the Special Adviser to the President on Energy, Olu Verheijen, explained that the Programme represented a decisive reset of the electricity market, combining debt resolution with broader financial and structural reforms.
The bond issuance signing event was sequel to the successful completion of Series 1 Power Sector Bond Issuance by NBET Finance Company Plc. Series 1 issuance closed at N501 billion, comprising N300 billion raised from the capital markets and N201 billion in bonds allotted to participating power generation companies, reflecting strong investor confidence in the reform agenda.
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Under the Programme, verified receivables for electricity supplied between February 2015 and March 2025 are being settled through negotiated agreements with power generation companies.
Currently, five GenCos namely First Independent Power Limited (FIPL), Geregu Power Plc, Ibom Power Company Limited, Mabon Limited and Niger Delta Power Holding Company Limited (NDPHC) have executed Settlement Agreements with the Nigerian Bulk Electricity Trading Plc (NBET). The total negotiated settlement amount for these companies stands at N827.16 billion, to be paid in four instalments.
According to the deal, proceeds from Series 1 issuance will fund the first and second instalment payments to participating power generation companies with signed Settlement Agreements, estimated at N421.42 billion, representing approximately 50% of the total negotiated settlement amount. The payment for this initial phase will be made through a mix of cash and notes.
Commenting on the bond issuance, the Group Managing Director of Sahara Power Group, which owns five power plants, Mr. Kola Adesina, said: “Capital formation can only come when there is confidence, when you can truly see a line of sight in recovering investments previously made. Because we were being owed so much, it was a bit of a problem for us to put in more money.
“But last year we took the bull by the horns, based on President Bola Ahmed Tinubu’s commitment in resolving the legacy issues, and I can say that once this process is over, construction will commence immediately on the second phase of our Egbin Power Plant. On behalf of the Generation Companies, I’d like to thank the President for this resolution”, the industry expert added.
By helping the government in clearing the debt arrears, the Programme is expected to improve liquidity for power generation companies, strengthen their ability to meet operating and debt obligations, unlock new investment across the sector and support more reliable electricity supply to homes and businesses. It also reinforces fiscal discipline through validated claims, negotiated settlements and transparent capital market financing.
When completed, the Programme will impact 4,483.60MWh/h of electricity generation capacity by Nigerian GenCos, effectively finalizing settlement of payments for 290,644.84GWhr of electricity billed since February 2015 and providing a strong foundation for new investments into capacity enhancement and expansion by companies serving 12.03mn active registered customers across the country.
The Special Adviser to the President on Energy commended Tinubu, the ministers and members of the Presidential Power Sector Debt Reduction Committee for making the PPSDRP a reality. Also, she acknowledged the support of other power sector stakeholders as well as the Debt Management Office (DMO), Central Bank of Nigeria (CBN), the National Pensions Commission (PenCom), and the Nigerian Revenue Service (NRS), who facilitated the bond issuance.
Verheijen assured: “The Federal Government reaffirms its commitment to disciplined implementation of the Programme, and we look forward to the participation of other power generation companies, as part of our broader reforms aimed at building a financially sustainable electricity market that is capable of supporting Nigeria’s long-term economic growth.”
CardinalStone Partners Limited, a leading Investment banking firm in Nigeria, led the consortium of appointed professional parties as Lead Financial Adviser and Lead Issuing House to successfully execute the Series 1 Bond Issue, while the Nigerian Bulk Electricity Trading Plc (NBET) acted as Sponsor of the Transaction, and the Office of the Special Adviser on Energy led the settlement negotiations and engagements with the GenCos.
