Nigeria Plans Major Bond Issue to Address Electricity Sector Debt
The Nigerian government is set to raise approximately NOK 729 billion through a second bond issuance aimed at settling confirmed legacy debts owed by electricity generation companies (GenCos). This initiative seeks to restore liquidity in the country’s struggling electricity sector and bolster efforts to attract new investments.
Scheduled to follow an investor forum on July 21, 2026, this issuance follows a prior bond issuance of N501 billion in January, which brings the cumulative total of the first phase of the Presidential Power Sector Debt Reduction Program to around N1.23 trillion.
In a recent announcement, the Nigerian Bulk Electricity Trading Company (NBET) detailed that this bond issuance is part of the government’s N4 trillion strategy, authorized by President Bola Tinubu, to alleviate longstanding payment obligations across the power value chain.
This comprehensive program aims to tackle one of the critical structural challenges plaguing Nigeria’s power sector—chronic payment arrears from GenCos. Such arrears have hindered investment, restricted liquidity, and jeopardized the financial viability of the Nigerian Electricity Supply Industry (NESI).
NBET confirmed that the initial coupon and principal payments for Series 1 notes due on July 14, 2026, were made in full and on schedule. This demonstrates the government’s commitment to fulfilling its obligations, thereby enhancing investor confidence ahead of the upcoming second issuance.
The anticipated Series 2 bond, valued at approximately N729 billion, together with the previous Series 1 issuance of N501 billion, marks the initial phase of a broader capital market initiative intended to mobilize N4 trillion to eliminate established debts in the electricity sector.
According to NBET, the initiative is expected to significantly enhance liquidity throughout the electricity value chain, fortify the financial standing of market participants, and foster a more attractive environment for long-term private investment in power generation. NBET’s Managing Director and CEO, Mr. Johnson Akinnawo, emphasized that the planned issuance marks a pivotal milestone in the government’s efforts to stabilize the electricity market.
Mr. Akinnawo reiterated that the second issuance clearly showcases the federal government’s commitment to addressing verified legacy obligations transparently and through a structured, market-driven approach. He believes that by improving liquidity within the power sector, the program will ultimately strengthen market participants’ financial health, encourage new investments, and promote sustainable energy generation for the Nigerian populace.
He recalled that the establishment of the N4 trillion Presidential Power Sector Debt Reduction Program was approved by the Federal Executive Council (FEC) in 2025, with NBET designated as the agency responsible for managing confirmed debts within the electricity market.
Mr. Akinnawo elaborated that the execution of this program will occur via multiple debt issuances by NBET Finance Company Plc, a special purpose vehicle designed to facilitate this initiative. The debt instruments are backed by the full faith and credit of the federal government and come with extensive risk mitigation strategies designed to assure investors of a successful implementation.
He noted that the second bond issue represents a crucial step toward resolving the enduring fiscal challenges confronting the electricity market. Mr. Akinnawo described this issuance as essential for establishing a more stable and investable electricity market, which is vital for supporting Nigeria’s broader economic growth.
Nigeria’s electricity sector has faced persistent liquidity problems for over a decade, driven by tariff deficits, subsidy burdens, and payment defaults throughout the value chain. This rising debt has severely impacted GenCos, limiting their investment in maintenance and expansion, weakening gas supplies to power plants, and diminishing investor and lender confidence.
