Nigeria’s Federal Government has raised ₦728.9 billion through a new power-sector bond as it steps up efforts to clear long-standing debts owed to electricity Generation Companies (GenCos) and improve liquidity across the electricity market.

The Series 2 bond is part of the Federal Government’s Presidential Power Sector Debt Reduction Programme, which was created to address verified legacy obligations that have continued to weigh on Nigeria’s electricity supply industry.

The new issuance is divided into two parts. About ₦402 billion was raised through the capital market, while another ₦326.9 billion was issued as non-cash bonds to participating GenCos. The seven-year amortising bond is being issued through NBET Finance Company under the wider ₦4 trillion power-sector debt reduction programme.

The move follows the successful completion of the programme’s first series, which raised ₦501 billion in January 2026. Under that first issuance, ₦300 billion was raised from the market, while ₦201 billion was issued through non-cash instruments. Eight GenCos covering 17 power plants participated in the first round, with about ₦333 billion subsequently settled to them.

The Federal Government says the debt problem has been one of the major factors affecting liquidity and investment across Nigeria’s electricity market. A verification exercise reduced the claims initially considered under the ₦4 trillion programme to about ₦3.3 trillion in verified obligations.

For GenCos, clearing these debts could provide much-needed liquidity to meet obligations to gas suppliers, lenders and other service providers. This is important because financial pressure on generators can affect their ability to maintain plants, secure gas and invest in additional generation capacity.

Government officials also argue that settling the debts should help restore confidence among investors and strengthen the financial foundation of the electricity market.

But the bond programme is only one part of the solution. The Federal Government has acknowledged that debt settlement must be accompanied by stronger revenue collection, better market discipline and reforms that prevent new liabilities from building up again.

For Nigeria’s power sector, the real test will therefore be whether the fresh capital can translate into a healthier electricity market, more reliable generation and greater willingness from investors to put money into new power infrastructure.