By Olumide Johnson
The federal government has issued a fresh N728.98 billion power sector bond, its second major intervention under the N4 trillion Power Sector Multi-Instrument Issuance Programme, to settle verified legacy debts owed to 11 electricity generation companies, even as the sector continues to face an estimated N1.7 trillion annual revenue shortfall.
DEVELOPMENT:
The Series 2 issuance comprises N402 billion in cash bonds raised from the domestic capital market and N326.98 billion in non-cash bonds allocated to participating GenCos under the Presidential Power Sector Debt Reduction Programme (PPSDRP).
Minister of Finance and Coordinating Minister of the Economy, Dr. Taiwo Oyedele, said that the intervention addresses accumulated obligations that have weakened liquidity and investment across the electricity value chain.
“This transaction addresses an important challenge in Nigeria’s electricity market, which is accumulated legacy obligations that have weakened liquidity, constrained investments and affected confidence across the value chain.”
But Oyedele warned that debt settlement alone cannot fix the market, stressing the need for stronger market discipline, revenue assurance, lower technical and commercial losses, and accountability.
DATA:
Series 2 brings government’s combined intervention under the programme to more than N1.23 trillion, following the N501 billion Series 1 issuance completed in January 2026 for eight GenCos.
The latest settlement covers 11 GenCos and 21 power plants, following extensive verification of debts owed to GenCos and gas suppliers. The Nigerian Bulk Electricity Trading (NBET) Plc estimates that non-cost-reflective tariffs and persistent market revenue shortfalls continue to generate an annual funding gap of about N1.7 trillion.
SIGNIFICANCE:
NBET Managing Director and Chief Executive Officer, Akin Odeyemi, said that the programme provides “a structural and market-aligned mechanism” for settling verified legacy debt while restoring liquidity and confidence.
Special Adviser to the President on Energy, Olu Verheijen, said: “Series 1 proved the model, and Series 2 is scaling it. What these numbers represent is trust restored, tested and honoured.”
Representing the Minister of Power, Joseph Olasunkanmi Tegbe, Permanent Secretary, Mahmuda Mamman, said: “This event matches commitment with action.”
For investors, however, the critical question is whether the intervention changes the sector’s cash-generation capacity rather than simply transferring old liabilities to government-backed instruments.
NEXT MOVE:
Attention now shifts to whether the government can reduce the recurring revenue deficit, improve tariff cost-reflectivity, strengthen collections and cut technical and commercial losses.
Lanre Babalola, Special Adviser to the President on Power, cautioned that legacy debt settlement will be insufficient unless the structural causes of recurring liabilities are addressed.
GenCos will also be expected to convert improved liquidity into stronger operational performance. Kola Adesina, Sahara Group Chief Executive Officer, welcomed the intervention as a confidence-building measure but stressed that liquidity must translate into better operations.
OUR LENS:
The bond is a major financial clean-up, but Nigeria’s power problem is no longer merely a debt problem. Michael Nzewi, Managing Director of CardinalStone Capital Advisers, described the N728.98 billion transaction as the largest bond issuance in Nigeria’s capital-market history.
Ayodeji Gbeleyi, Director-General of the BPE, tied sustainable electricity to Nigeria’s $1 trillion economic ambition. Verheijen similarly framed the programme as part of President Bola Tinubu’s push to move the sector “from debt and dysfunction to delivery and discipline.”
The real test is therefore whether N1.23 trillion of intervention can help break the cycle that produces the next N1.7 trillion gap.
Olumide Johnson is a journalist, reporting on energy, business, markets, policy and developments shaping Nigeria’s economy.
Discover more from StakeBridge Media
Subscribe to get the latest posts sent to your email.