The federal government’s N501.02 billion bond issuance has been described as a major milestone in Nigeria’s power sector reform agenda aimed at addressing longstanding liquidity challenges.

According to a statement on Monday by the power ministry, the bond issuance was central to restoring confidence in the electricity market and repositioning the sector for long-term sustainability.

It said that as reforms continued to unfold in the power sector, the bond stood out as a cornerstone achievement that not only addressed immediate financial pressures.

According to the statement, the bond, executed through the Nigerian Bulk Electricity Trading, forms part of a broader N4 trillion Presidential Power Sector Debt Reduction Programme approved by President Bola Tinubu.

“This represents a strategic shift from ad hoc interventions to structured, market-driven solutions.

“It is designed to clear a significant portion of the over N6tn debt burden crippling the sector. The initiative underscores a reform-focused approach aimed at addressing long-standing structural inefficiencies,” it said.

It noted that the reform was aimed at improving cash flow across the electricity value chain.

The statement explained that chronic revenue shortfalls arising from non-cost-reflective tariffs and underfunded subsidies had constrained generation companies’ ability to meet obligations to gas suppliers and maintain infrastructure.

“The bond proceeds are expected to reverse this trend by settling legacy debts, restoring gas supply, and enabling improved plant maintenance, key factors in boosting electricity generation.

“Beyond immediate liquidity support, the intervention signals renewed investor confidence in the sector, backed by a sovereign guarantee and aligned with global financing standards.

“The bond is positioned to attract private capital, enhance bankability, and stimulate further investments in generation and infrastructure. It will also serve as complementary reforms, including targeted subsidies for vulnerable consumers and ongoing tariff adjustments and reflect a broader policy framework aimed at achieving full commercialisation,” it said.

It added that the bond was also central to unlocking growth across the electricity value chain and explained that the intervention was not only about settling debts but also about resetting the foundation of the electricity market.

“By restoring liquidity, enhancing bankability, and creating a more predictable investment climate, the government is laying the groundwork for sustainable growth and improved electricity supply,” the statement said.

The ministry mentioned that restoring liquidity, enhancing bankability and creating a predictable investment climate would lay the groundwork for sustainable growth and improved electricity supply, adding that the initiative, alongside targeted subsidies and tariff reforms, reflected a deliberate policy shift toward full commercialisation and long-term viability of the sector.

(NAN)