Nigeria’s Federal Government is giving investors one last opportunity to take part in a major financing effort aimed at rescuing the struggling power sector. The offer to subscribe to a ₦590 billion Power Sector Bond ends on December 30, 2025, providing a limited window for market participants to join the drive to clear long-standing electricity debts.
The bond is the first tranche of a ₦4 trillion Presidential Power Sector Debt Reduction Programme designed to tackle decades of unpaid liabilities owed by the Nigerian Bulk Electricity Trading Company (NBET) to electricity generation companies (GenCos). The programme is an initiative of the Federal Executive Council and forms part of broader efforts to restore investor confidence in Nigeria’s electricity supply industry.
Under this plan, NBET Finance Company Plc, a special purpose vehicle sponsored by the Federal Government, has issued the Series 1 Power Sector Bond. This financing instrument is fully backed by the Nigerian Government and aims to inject liquidity into the power sector by settling verified debt accrued between 2015 and March 2025.
In a notice sent to prospective investors by CardinalStone Partners Limited, the lead issuing house, the bond subscription is already open and scheduled to close by the end of the year. The offer includes two parts: a ₦300 billion cash tranche (Tranche A) and a ₦290 billion non-cash tranche (Tranche B), both with a seven-year maturity and fixed coupon rates.
The bonds will pay investors semi-annual interest and will be listed on both the Nigerian Exchange Limited and the FMDQ Securities Exchange, giving investors avenues for secondary market trading. Minimum investment starts at ₦5 million, with additional subscriptions accepted in multiples of ₦1 million.
According to the issuer’s mail to investors, these bonds benefit from several enhancements including government backing, Central Bank of Nigeria liquidity status, pension fund investment eligibility, and tax-exempt status approved by the Ministry of Finance.
The Debt Reduction Programme itself rests on three pillars: establishing a framework to settle verified debts, negotiating settlement agreements with GenCos at agreed-upon discounts, and creating mechanisms to prevent future debt accumulation. Officials hope this structured approach will settle a significant portion of the outstanding liabilities and strengthen the sector’s financial footing.
However, while the bond offer may help relieve some of the sector’s financial strain, some industry stakeholders have raised questions about the legal and structural arrangements supporting the transaction. Concerns have been voiced regarding the special purpose vehicle used to raise the bond and whether its creation falls within regulatory guidelines.
Some market insiders have also called for greater transparency around the fees associated with the bond issuance and clarity on how the broader debt programme aligns with long-term reforms in the power sector. Critics argue that unless deeper structural challenges, such as inefficiencies, liquidity issues, and inadequate tariff structures, are resolved, the cycle of debt may persist even after this financial intervention.
Indeed, Nigeria’s electricity market has long been plagued by weak revenue collection, under-remittance by distribution companies (DisCos), and a lack of consistent investment, leading to mounting debts that have occasionally threatened GenCos’ viability. The Federal Government’s attempt to use bonds to settle these liabilities signals a shift in how infrastructure financing and legacy debt are being tackled in Nigeria.
