The Federal Government of Nigeria has successfully raised ₦501.02 billion from the domestic bond market to begin settling payment arrears owed to power generation companies (GenCos) under a structured debt reduction programme, officials said on Tuesday, January 27, 2026.
The landmark financing is part of broader efforts to resolve long-standing liabilities in the electricity sector that have exceeded ₦6 trillion and constrained investment, liquidity and power supply reliability across the value chain.
The funds were mobilised through the issuance of two bond tranches under the Presidential Power Sector Debt Reduction Programme (PPSDRP).
These included a ₦300 billion 7-year Series 1 Tranche A bond and a ₦201.02 billion 7-year Series 1 Tranche B bond, both carrying an interest rate of 17.50 per cent and fully guaranteed by the Federal Government.
At an agreement signing ceremony in Lagos, Mrs. Olu Verheijen, Special Adviser on Energy to President Bola Ahmed Tinubu, said the bond issuance reflects a decisive “reset” of the electricity market by addressing verified arrears owed to GenCos for power supplied between February 2015 and March 2025.
According to Verheijen, 14 generation companies have now signed Full and Final Settlement Agreements with a total negotiated value of about ₦827 billion, paving the way for the initial payments.
Proceeds from the Series 1 issuance will fund the first and second instalment payments, estimated at ₦421.42 billion, to participating GenCos through a mix of cash and notes, representing roughly half of the negotiated settlement value.
The initiative reflects government efforts to restore liquidity across the power value chain, improve payment certainty and create the financial headroom necessary for operators to stabilise assets, maintain infrastructure and plan for new investment.
Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, represented at the ceremony by Ms. Patience Oniha, Director-General of the Debt Management Office (DMO), noted that resolving legacy liabilities is essential to unlocking growth in the power sector.
The structured settlement process aims to enable GenCos to strengthen balance sheets, attract capital and support improved electricity availability nationwide.
Officials and industry stakeholders described the bond issuance as a critical milestone toward sector stability. Mr. Johnson Akinnawo, Acting Managing Director of NBET Finance Company Plc, the special purpose vehicle that issued the bonds, said the transaction will significantly enhance liquidity and support renewed investment in the Nigerian power market.
Resolving legacy GenCo debts has far-reaching implications for Nigeria’s business environment. Persistent arrears had historically weakened power producers’ capacity to service obligations, maintain infrastructure and attract private capital.
By clearing a portion of these debts, the Federal Government aims to restore confidence among energy investors, stimulate operational improvements and encourage expansion in generation capacity.
For urban economies, reliable power supply is a key determinant of productivity, entrepreneurial activity and industrial growth. Strengthened liquidity in the electricity sector may reduce outages, lower production costs and improve the operational environment for businesses and households.
The Federal Government’s successful ₦501 billion bond issuance marks a significant step in tackling Nigeria’s persistent power sector debt challenge.
By beginning the structured settlement of arrears to GenCos and enhancing market liquidity, authorities have signalled a commitment to long-term reform, improved investor confidence and a more stable electricity landscape that supports economic growth and development.
