The Nigerian Bulk Electricity Trading Plc (NBET) has commenced settling outstanding obligations to electricity generation companies and their associated gas suppliers under the Nigeria Government’s Power Sector Debt Reduction Programme.
NBET’s Managing Director and Chief Executive Officer, Akin Odeyemi, disclosed this in a statement following the signing of ₦728.979 billion in Series Two bonds under the ₦4 trillion Power Sector Multi-Instrument Issuance Programme.
He said the settlement comprises ₦402 billion in cash bonds and ₦326.979 billion in non-cash bonds.
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Odeyemi described the development as a milestone in President Bola Tinubu’s debt reduction programme, which seeks to address longstanding financial obligations and improve liquidity across the electricity value chain.
For more than a decade, Nigeria’s power sector has faced persistent payment challenges, with generation companies supplying electricity to NBET, which subsequently sells it to distribution companies.
However, questions remain over whether the bond-based arrangement will provide sufficient liquidity to address the sector’s financial difficulties.
While the cash bonds offer some financial relief, the ₦326.979 billion in non-cash bonds may not immediately provide generators and gas suppliers with the funds needed to cover operational expenses, maintain equipment and settle outstanding bills.
Odeyemi noted that the bonds also carry repayment obligations over time, meaning the settlement does not automatically eliminate the financial burden associated with the sector’s accumulated debts.
Underlying Challenges
He identified some underlying challenges as electricity tariffs that have historically fallen below the cost of supply, subsidy-related shortfalls, revenue losses, inadequate metering and billing gaps.
He stressed that without reforms to ensure accurate electricity billing and timely payments, fresh arrears could accumulate, potentially triggering another cycle of debt.
According to him, the programme is designed to establish a more sustainable cash-flow framework for the electricity market, although its long-term effectiveness will depend on the market’s ability to meet its financial obligations consistently.
He also disclosed that preparations were underway for the second phase of the programme, indicating that the debt settlement process would continue.
Odeyemi said improved financial stability could help generation companies maintain their facilities and increase electricity output.
However, reliable power supply would also depend on adequate gas supply, sufficient transmission capacity and stronger distribution networks.
Consequently, the impact of the settlement may not immediately translate into longer hours of electricity supply for homes and businesses.
The NBET chief described the programme as a step towards resolving years of unpaid obligations, stating that its long-term success would depend on transparent implementation, timely payments and reforms to prevent the accumulation of fresh debt.
He said the ultimate test would be whether Nigeria could establish an electricity market that pays generators and gas suppliers reliably, sustains investment and delivers more dependable power to consumers without repeated government bailouts.
