BY CHIKA OKEKE, Abuja
The Federal Government has advanced plans to rescue the electricity sector from years of underinvestment by floating N729bn bonds in August, meant to offset the mounting debts owed by individuals and corporate organisations.
Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, who disclosed this at the Nigerian Bulk Electricity Trading Plc, NBET, Investors Forum in Abuja, blamed underinvestment on liquidity shortages, tariff shortfalls, mounting debts to generation companies and weak market confidence.
The bond, which is part of the Presidential Power Sector Debt Reduction Programme, is expected to be set aside for the payment of verified obligations to generation companies and gas suppliers to improve liquidity, boost plant availability, and restore investor confidence in the power sector.
Oyedele informed that the bonds will be raised through the second tranche of its Power Sector Multi-Instrument Issuance Programme, saying that the successful deployment and subscription of the earlier bonds for the payment of electricity debts strengthened investor confidence.
He said: “For more than a decade, the Nigerian Electricity Supply Industry struggled under persistent tariff shortfalls, settlement gaps within the bulk electricity trading framework, accumulated debts to generation companies and their suppliers, and grid instability, constraining investment and weakening sector performance.
“These problems could not be solved by budgetary allocation alone. They require structural, market-based solutions.”
The Minister revealed that President Bola Tinubu instituted the Presidential Power Sector Debt Reduction Committee to verify liabilities and develop a sustainable settlement framework capable of attracting long-term private investment.
In January this year, the Federal Government issued a ₦501 billion inaugural bond under the Presidential Power Sector Debt Reduction Programme, PPSDRP, recording 100 percent subscription from pension funds, banks, asset managers and other investors.
The Series 1 Power Sector Bond was issued by NBET Finance Company Plc. Series 1 issuance closed at ₦501 billion, comprising ₦300 billion raised from the capital markets and ₦201 billion in bonds allotted to participating power generation companies.
Under the programme, verified receivables for electricity supplied between February 2015 and March 2025 were settled through negotiated agreements with power generation companies.
Representing the fourteen power plants nationwide, the five power generation companies are First Independent Power Limited, FIPL, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited and Niger Delta Power Holding Company Limited, NDPHC, executed settlement agreements with the NBET. The total negotiated settlement amount for the companies stood at ₦827.16 billion and to be paid in four phased instalments.
The planned bonds mark the Federal Government commitment in developing a financially sustainable electricity market that is capable of supporting Nigeria’s long-term economic growth.
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