December 24, 2025/CSL Update
In a recent statement, the Office of the Special Adviser to the President on Energy announced that the Federal Government of Nigeria has taken a decisive step to address the liquidity challenges in the power sector through the issuance of a ₦590 billion Series 1 Power Sector Bond. The bond, issued under the Presidential Power Sector Debt Reduction Programme, is intended to settle verified outstanding obligations owed to generation companies (GenCos) and gas suppliers.
It was issued through NBET Finance Company Plc, a special purpose vehicle of the Nigerian Bulk Electricity Trading Company and carries the full sovereign guarantee of the Federal Government. This issuance forms part of a broader ₦1.23 trillion programme scheduled for completion by Q1 2026, aimed at resolving the sector’s legacy debt overhang that has long constrained investment and operational sustainability.
The clearance of legacy debt marks a pivotal turning point for Nigeria’s electricity market. By settling long-standing arrears owed to generation companies and gas suppliers, the programme provides immediate liquidity relief across the power value chain, easing cash-flow constraints that have historically undermined plant operations, gas supply reliability, and maintenance activity.
This intervention is expected to support improved power availability and operational stability, even in the absence of new capacity additions. Beyond the near-term operational benefits, the sovereign-backed settlement significantly improves investor and lender confidence in the sector. By reducing counterparty risk and strengthening the balance sheets of key market participants, the programme enhances the bankability of power purchase and gas supply agreements and lowers financing risk for future projects.
Over time, this should translate into improved access to capital, reduced reliance on government support mechanisms, and renewed private-sector participation across generation, gas-to-power, transmission, and distribution. Importantly, the debt clearance creates a stronger foundation for broader market reforms, including the transition toward a more contract-based and commercially viable electricity market. While execution risks remain, particularly around tariff adequacy, collection efficiency, and transmission constraints, the programme represents a critical reset for the sector. If complemented by sustained regulatory and pricing reforms, the initiative has the potential to unlock durable investment flows, enhance power reliability, and deliver meaningful productivity gains across the wider economy.
Click here to download full report: CSL Nigeria Daily – 24 December 2025 – ELECTRICITY.pdf
