Nigeria settles N333bn power debt, launches N729bn bond tranche
Nigeria has paid N333 billion to electricity generators to clear the first tranche of its power debt programme and launched a N729 billion bond to settle remaining liabilities, aiming to restore liquidity and investor confidence in the grid.
The Federal Government has disbursed N333 billion to eight electricity generation companies operating 17 power plants, completing the initial phase of its power sector debt settlement programme. The payout was announced alongside the launch of a second bond issuance valued at roughly N729 billion, designed to cover the remaining verified legacy debts. The instruments were unveiled at an investor forum in Abuja on Tuesday hosted by the Nigerian Bulk Electricity Trading Plc (NBET).
The first tranche of the settlement programme totalled approximately N501 billion, comprising N300 billion in cash and N201 billion in non-cash bond instruments. This addressed about 22 percent of the government's total settlement obligations under executed agreements, with the balance to be covered through subsequent issuances. Olu Verheijen, Special Adviser to the President on energy, confirmed that the first Series 1 coupon was paid in full on July 14, 2026.
Clearing these arrears is already altering the operational reality of Nigeria's electricity supply chain. Generating companies are now meeting their gas obligations and paying lenders and maintenance contractors that had previously gone unpaid due to chronic illiquidity. Resolving this cash crunch is critical to achieving reliable power supply and reversing the fiscal dysfunction that has historically deterred investment.
The government is attempting to reposition these legacy liabilities as bankable investment opportunities. “We are converting yesterday’s liabilities into today’s liquidity and tomorrow’s investment capacity,” Verheijen told investors. “Markets do not reward promises, they reward performance and that is why we deliberately chose execution before expansion.”
Building sovereign credibility is central to this strategy. “Bankability doesn’t begin in financial markets. It begins with governments that honour their contracts, that meet their obligations, that create predictable rules,” Verheijen said. “Capital follows credibility.” Johnson Akinnawo, acting managing director of NBET, said the first issuance proved that Nigerian legacy power sector debt, “the kind that has sat on generation company books for years, distorting investment decisions and starving the sector of confidence, could be resolved through disciplined, transparent capital market instruments rather than endless promises.”
The government is now pitching the N729 billion Series 2 bond directly to domestic institutional capital. Joseph Tegbe, Minister of Power, urged pension funds, insurers and banks to subscribe, framing the offering as a chance to partner in transforming Africa’s largest electricity market. The success of this issuance will determine whether the initial relief can be scaled into a sustained financial recovery for the sector.
