January 29, 2026/CSL Update
The Federal Government commenced the resolution of Nigeria’s estimated ₦4 trillion power sector debt burden on Tuesday, 27 January 2026, with the execution of settlement agreements under the Presidential Power Sector Debt Reduction Programme, following the issuance of a ₦501 billion bond.
The bond, which represents the inaugural Series 1 of the Power Sector Bond programme, was issued by NBET Finance Company Plc and comprised ₦300 billion raised from the capital market alongside ₦201 billion in bonds allocated to participating power generation companies.
The issuance achieved full subscription, drawing strong interest from pension funds, banks, asset managers, and other institutional investors. Five generation companies—First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and the Niger Delta Power Holding Company Limited—covering 14 power plants nationwide, executed settlement agreements with the Nigerian Bulk Electricity Trading Plc as part of the initiative.
The clearance of legacy obligations marks a significant inflection point for Nigeria’s electricity market, addressing a debt overhang that has persistently constrained investment and weakened operational sustainability. By settling long-standing arrears owed to generation companies and gas suppliers, the programme injects much-needed liquidity across the power value chain, alleviating cash-flow pressures that have historically impaired plant operations, gas supply reliability, and maintenance activities. This intervention is expected to support improved power availability and operational stability, even without immediate capacity expansion.
More broadly, the sovereign-backed settlement strengthens confidence among investors and lenders by reducing counterparty risk and improving the financial standing of key market participants, thereby enhancing the bankability of power purchase and gas supply agreements while lowering financing risks for future projects.
Over the medium to long term, these improvements should facilitate better access to private capital, reduce dependence on government support mechanisms, and reinvigorate private-sector participation across generation, gas-to-power, transmission, and distribution segments. Crucially, the debt resolution provides a firmer foundation for deeper structural reforms, including the transition towards a more contract-driven and commercially sustainable electricity market.
While material challenges remain, particularly around tariff adequacy, revenue collection efficiency, and transmission capacity constraints, the programme represents an important reset for the sector. If reinforced by consistent regulatory enforcement and cost-reflective pricing reforms, the initiative has the potential to unlock sustained investment, improve power reliability, and generate meaningful productivity gains across the broader Nigerian economy.
Click here to download full report: CSL Nigeria Daily – 29 January 2026 – Power.pdf
