President’s N4trn bond programme is resurrecting Nigeria’s power sector—Olu Verheijen, Adviser on Energy

n n

For more than a decade, Nigeria’s power sector laboured under a burden that made reliable electricity commercially impossible.

n

The problem was not merely infrastructure—though the gaps were severe. The fundamental challenge was financial. Years of unpaid obligations had accumulated across the value chain, eroding the credibility of market commitments and making it impossible to attract capital at scale.

n

Generators were owed billions for electricity delivered. Gas suppliers were owed billions for fuel already burned. Yet the obligations remained unpaid, and the market remained trapped in a cycle of illiquidity that left households and businesses with some of the most expensive and unreliable electricity in the world.

n

President Bola Ahmed Tinubu decided to break that cycle.

n

Financial intervention

n

In 2025, the Federal Executive Council approved a N4 trillion bond programme designed to settle verified debts owed to 21 generation companies—covering legacy obligations accumulated from 2015 to March 2025. This was not a partial measure or a temporary fix. It was the most comprehensive financial intervention in the history of Nigeria’s power sector.

n

“This financial reset has been paired with a focused programme of grid-led market redesign to improve performance and unlock growth,” explained Olu Verheijen, Special Adviser to the President on Energy. “Through rigorous verification, negotiated settlements, and a credible bond-backed framework, the programme is resolving legacy obligations and re-establishing the financial credibility required for sustained investment.”

n

The administration moved with unusual speed and precision. First came the verification process—meticulous, transparent, and designed to ensure that only legitimate claims would be settled. Then came the negotiations. When the process concluded, N3.48 trillion had been negotiated as full and final settlement of the verified claims—a reduction achieved through good-faith engagement between government and market participants.

n

Eight GenCos representing 17 power plants signed Final Settlement Agreements. The ¦ 2.3 trillion encompassed in those signed agreements represented a major step toward market rehabilitation.

n

Serious intent

n

But the government’s commitment did not rest on signed agreements alone. The administration proceeded to raise capital from the markets. Series 1 of the bond programme—N501 billion—was launched and achieved 100 percent subscription. Capital markets had delivered their verdict: the government’s commitment to honour its obligations was credible.

n

Proceeds from the first tranche began disbursing to GenCos, providing immediate liquidity to a part of the value chain that had been starved of payment for years. Series 2, a ¦ 730 billion issuance scheduled for the second quarter of 2026, is designed to further extinguish outstanding debt. The process continues until full settlement is achieved.

n

“The Presidential Power Sector Debt Reduction Programme—the most comprehensive financial intervention in the sector’s history—was established to restore liquidity, rebuild confidence, and stabilise the value chain,” Verheijen stated. “Through rigorous verification, negotiated settlements, and a credible bond-backed framework, the programme is resolving legacy obligations and re-establishing the financial credibility required for sustained investment.”

n

Beyond the bond

n

The bond programme was never intended to stand alone. It is part of a broader market redesign focused on making Nigeria’s electricity sector bankable, investable, and capable of delivering electricity at scale.

n

The acceleration of the Presidential Metering Initiative is closing the metering gap at speed, deploying millions of smart meters to end estimated billing, improve collections, and reduce theft and commercial losses. With an additional $700 million secured, the initiative now has a pipeline capable of deploying approximately five million smart meters nationwide.

n

New generation capacity has also come online. The 700-megawatt Zungeru Hydroelectric project in Niger State, the 240-megawatt Afam III fast-power project, and the 40-megawatt Kashimbilla Hydropower project have added 980 megawatts to the grid—representing 7 percent of Nigeria’s 14 gigawatts of installed capacity.

n

The Subsidy Reform That Protects the Poor

n

Critically, the administration has coupled its financial and infrastructure reforms with a targeted approach to customer support that replaces the regressive blanket subsidy system. Under the old system, high-consuming households—overwhelmingly the wealthiest Nigerians—received the largest subsidy benefits. The poor received almost nothing.

n

President Tinubu’s tariff reforms have flipped that dynamic. The share of subsidy benefits flowing to vulnerable households has increased to 40 percent, while high-consumption households now receive a smaller proportion. Subsidies are made visible on bills so citizens can see exactly what support they are receiving. And the reforms have freed public resources previously consumed by wasteful subsidies for investment in health, education, and infrastructure.

n

Verheijen captured the administration’s philosophy succinctly: “Targeted customer support frameworks are being introduced to protect the most vulnerable while reinforcing payment discipline across the market. Together, these reforms are improving service delivery and restoring the commercial viability of the electricity value chain.”

n

The foundation has been laid. The work of scaling investment and deepening market discipline continues

n n