By Africa Bazaar Staff Writer | December 22, 2025
The Nigeria government Friday took a decisive step to unlock long-stalled investment in its power sector with the issuance of its debut Power Sector Bond, marking what officials and market participants describe as the most ambitious financial intervention in the industry’s history.
The Nigeria government, through the Presidential Power Sector Debt Reduction Program, issued a ₦590 billion Series 1 Power Sector Bond on December 19, opening a multi-trillion-Naira financing program designed to clear legacy debts and restore confidence across the nation’s electricity value chain.
The bond, issued by NBET Finance Company Plc, a Special Purpose Vehicle bonds issuance of the Nigerian Bulk Electricity Trading Plc, is fully guaranteed by the full faith and credit of the Nigeria Federal Government—a critical feature that has driven strong interest from institutional investors. CardinalStone served as lead financial adviser and lead issuing house.
Repositioning Nigeria’s Energy Market
The Series 1 issuance marks the first phase of a broader bond program expected to raise ₦1–₦1.3 trillion by the first quarter of 2026, with proceeds earmarked for the payment of verified arrears owed to power generation companies and gas suppliers. In total, the Presidential Power Sector Debt Reduction Program authorizes the issuance of up to ₦4 trillion in government-backed bonds.
The program aims to target a long-standing debt overhang that has constrained new investment, weakened utility balance sheets, disrupted gas supply, and undermined reliable electricity delivery—one of the most persistent bottlenecks to Nigeria’s economic growth.
Officials describe the program as the largest coordinated financial intervention ever undertaken in Nigeria’s power sector, aimed not at propping up failing operators, but at structurally resetting the market.
“This is not a bailout. It is a strategic reset—one that clears verified arrears, restores liquidity, and gives power generation companies the footing they require to operate and invest with confidence,” said Olu Arowolo Verheijen, Special Adviser to the President on Energy, speaking at an investor forum in December.
The bond represents a rare proposition in Nigeria’s infrastructure landscape: sovereign-backed credit, ring-fenced use of proceeds, and systemic market impact. By absorbing legacy liabilities upfront, the government is materially reducing counterparty risk across the power value chain—generation, gas supply, and trading—thereby improving cash-flow predictability and credit quality.
This approach reopens the door for long-term capital from pension funds, insurers, infrastructure funds, and development finance institutions that have largely stayed on the sidelines. With balance sheets reset, power producers and gas suppliers are better positioned to finance maintenance, expand capacity, and enter new offtake arrangements under more bankable terms.
A Shift Away from Subsidies
At its core, the Power Sector Bond Program signals a strategic policy shift. Rather than relying on recurring subsidies that distort pricing and crowd out private capital, Nigeria is betting on financial engineering and market discipline to power its next growth phase.
By using capital markets to clear verified arrears, the government is restoring commercial logic to the sector. The result is a more transparent, rules-based environment that aligns with global investor expectations and reduces the need for ad hoc fiscal interventions.
The implications are expected to be far-reaching for businesses. Chronic power shortages have long forced firms to rely on costly self-generation, eroding margins and limiting competitiveness. A power sector with restored liquidity and stronger incentives to invest in gas supply, maintenance, and new generation capacity increases the likelihood of more reliable grid power over time.
A Timeline of Reform
- August 2025: President Bola Tinubu approved the Presidential Power Sector Debt Reduction Program, endorsed by the Federal Executive Council, authorizing up to ₦4 trillion in government-backed bonds.
- December 2025: The government hosted its first investor forum, presenting the bond issuance framework to domestic and international institutional investors.
- December 19, 2025: Launch of the ₦590 billion Series 1 Power Sector Bond, marking the operational start of the program.
Improved electricity reliability directly affects manufacturing, agro-processing, digital services, and data centers—sectors central to Nigeria’s diversification and job-creation agenda. Lower energy costs translate into improved productivity, more competitive pricing, and stronger export potential.
At a system level, the bond-led reset also repositions Nigeria’s energy sector within global capital markets. If paired with continued tariff reform, improved metering, and stronger governance at distribution companies, the program could catalyze a virtuous cycle: improved cash flows attract investment; investment improves service delivery; and better service strengthens willingness to pay.
The strong response to the inaugural December 2025 investor forum, which drew more than 600 participants from banks, pension funds, insurance firms, asset managers, issuing houses, trustees, and family offices, suggests that appetite exists—provided reforms remain credible and consistent.
Nigeria’s Power Sector Bond is more than a financing instrument—it is a statement of intent. By choosing structured market solutions over subsidies, the government is signaling a commitment to transparency, discipline, and private capital participation.
For investors, it offers a clearer risk framework and renewed opportunity. For businesses, it promises the prospect—long elusive—of more reliable and affordable power. And for Nigeria’s economy, it represents a critical step toward unlocking growth in Africa’s largest market by finally fixing the system that powers everything else.
