• Nigeria issues 501bn naira bond to clear power sector arrears
• Institutional investors fully subscribed to inaugural PPSDRP offering
• Programme aims to restore liquidity, boost electricity investment

The Nigerian federal government announced in late January the successful issuance of its first 501 billion naira ($360 million) bond under the Presidential Power Sector Debt Reduction Programme (PPSDRP), aimed at clearing arrears owed to power producers. Institutional investors, including pension funds, banks and asset managers, fully subscribed to the issuance.

The inaugural offering is intended to settle debts linked to electricity supplied between February 2015 and March 2025, a period during which arrears accumulated, straining producers’ liquidity and discouraging investment. Nigerian Bulk Electricity Trading Plc arranged the first tranche through its subsidiary, NBET Finance Company Plc. Series 1 includes 300 billion naira raised on the capital market and 201 billion naira in bonds issued directly to participating producers.

Five companies operating 14 power plants have already signed settlement agreements worth 827.16 billion naira, to be paid in four tranches. The funds raised will cover the first two tranches, estimated at 421.42 billion naira, about half of the total agreed amount. At a signing ceremony in Lagos, Olu Arowolo Verheijen, Special Adviser to the President on Energy, said the programme marked “a decisive reset of the electricity market,” combining debt resolution with financial reform.

The move comes as Nigeria continues to face a major electricity deficit. The World Bank estimates that 86.6 million Nigerians lacked access to electricity in 2023, the largest shortfall worldwide. International Energy Agency data shows Nigeria produced 40,959 GWh of electricity in 2023, ranking fifth in Africa, but per capita consumption remained low at 0.144 MWh.

By targeting arrears, authorities hope to restore producer liquidity and create the financial conditions needed for a gradual expansion of electricity supply, beyond decentralized solutions and renewable energy projects.

Abdoullah Diop