The Federal Government of Nigeria has announced a major financial intervention aimed at resolving the crippling debt crisis in the power sector. The Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun, revealed that the government is set to issue a N1.23 trillion Power Sector Bond.
A Strategic Move to Clear Legacy Debts
Speaking at an Investor Forum organized by the Presidential Power Sector Debt Reduction Committee (PPSDRC) alongside transaction advisers, Edun provided critical context. He disclosed that as of June 2025, the government's unpaid electricity subsidies to power generation companies (GENCOs) had ballooned to approximately N6 trillion. To make this massive liability manageable, officials have engaged with the GENCOs, and an agreement has been reached where around 50% of the debt may be forfeited by the companies.
This bond issuance represents the first phase of a broader N4 trillion debt programme designed to inject much-needed liquidity into the Nigerian Electricity Supply Industry (NESI). The forum, hosted by the Nigerian Bulk Electricity Trading Plc (NBET) and CardinalStone Partners Limited, successfully attracted over 650 key financial players. Attendees included pension fund administrators, commercial banks, asset managers, insurance firms, and high-net-worth individuals, many of whom indicated strong interest in subscribing to the bond.
Structured for Confidence and Long-Term Investment
Minister Edun emphasized that the bond has been carefully structured to meet international benchmarks, aiming to attract long-term institutional capital. Key features designed to boost its appeal include:
- Qualification for Central Bank of Nigeria (CBN) liquidity status.
- An exemption granted by the National Pension Commission (PenCom), making it a viable investment for Pension Fund Administrators.
"This initiative strengthens market transparency, encourages competition, and promotes private sector participation, which accounts for about 90 per cent of the economy," Edun stated. He further clarified the government's stance, noting a preference for such market-based financing mechanisms over unsustainable methods like currency printing.
Beyond a Bailout: A Foundation for Sustainable Power
The Special Adviser to the President on Energy, Mrs. Olu Verheijen, stressed that clearing the debt must be accompanied by robust financial and structural reforms to prevent the problem from recurring. This sentiment frames the bond as part of a larger corrective strategy, not merely a financial rescue.
Echoing this vision, the Acting Managing Director of NBET, Mr. Johnson Akinnawo, described the programme as a "strategic reset" for the entire power sector. He highlighted that the sovereign guarantee backing the bond ensures the initiative will evolve into opportunities that power industries, homes, and the nation's aspirations. The primary goals of this Phase 1 bond issuance are to provide immediate liquidity relief to the GENCOs, settle the legacy debts, and ultimately lay a solid foundation for a more efficient and self-sustaining electricity market in Nigeria.
