The Federal Government has unveiled plans to launch a N1.23 trillion Power Sector Bond as part of a broader N4 trillion debt programme aimed at restoring liquidity, stabilizing the electricity market, and boosting investor confidence in Nigeria’s power sector.

Finance Minister and Coordinating Minister of the Economy, Mr. Wale Edun, announced the initiative at an investor forum organized by the Presidential Power Sector Debt Reduction Committee (PPSDRC) in partnership with transaction advisers, ahead of Phase 1 of the bond issuance. The bond is backed by a sovereign guarantee from the Federal Government.

The forum, hosted by NBET and CardinalStone Partners Limited, drew over 650 participants, including pension fund administrators, asset managers, banks, insurance firms, trustees, and high-net-worth individuals, many expressing strong interest in participating.

As of June 2025, the government owed power generation companies (GENCOs) about N6 trillion in unpaid electricity subsidies. To reduce this liability, officials have pushed GENCOs to forfeit approximately 50 percent of the debt.

According to Minister Edun, the bond is structured to adhere to global best practices, targeting long-term institutional investors, especially pension funds. The instrument has Central Bank of Nigeria liquidity status and is exempt from National Pension Commission (PenCom) restrictions, making it fully eligible for pension fund investments.

“This initiative strengthens market transparency, fosters competition, and encourages private sector participation, which drives about 90 percent of Nigeria’s economy,” Edun said. He emphasized that the administration favors market-based financing over money printing or unsustainable funding options.

The Power Sector Bond Programme represents a first-of-its-kind effort to resolve legacy debts in the Nigerian Electricity Supply Industry (NESI) while laying the foundation for a self-sustaining, efficient power market.

Special Adviser to the President on Energy, Mrs. Olu Verheijen, highlighted that the bond is a critical first step in broader power sector reforms, stressing that debt clearance must be accompanied by financial and structural reforms to prevent future liabilities.

The Acting Managing Director of Nigerian Bulk Electricity Trading Plc (NBET), Mr. Johnson Akinnawo, described the initiative as a strategic reset, not a bailout. “The sovereign guarantee of the Federal Government ensures this initiative will grow into a forest of opportunities, powering industries, homes, and dreams,” he added.