- The N4tn power sector bond will support transmission expansion, grid modernisation, and debt settlement.
- Reforms aim to restore investor confidence, reduce technical losses, and improve electricity reliability.
The Federal Government (FG) plans to include a N4tn power sector bond in its updated Medium-Term Expenditure Framework (MTEF). This key initiative aims to stabilize Nigeria’s electricity market and settle critical obligations. By introducing the bond, the government intends to provide long-term liquidity and strengthen financial stability across the power sector.
Officials explained that the MTEF update reflects mounting financial pressure and the urgent need to restore investor confidence. Power Minister Adebayo Adelabu highlighted that the bond will support transmission expansion, settle certified debts owed to generating companies, and improve distribution companies’ finances weakened by years of under-recovery.
Adelabu emphasised that a phased approach will limit fiscal risks while ensuring a predictable settlement system across the sector. Persistent shortfalls in payments have historically discouraged private investment, strained public finances, and restricted capacity expansion. A stable repayment structure, he noted, is vital for restoring confidence among operators.
Key aspects of the bond include reducing technical losses, expanding metering programmes, and modernising the grid. The ministry is collaborating with the Transmission Company of Nigeria to prioritise congested corridors and ageing infrastructure that often trigger nationwide outages.
The minister also referenced the new Electricity Act, which decentralises power planning and regulation, allowing states to engage more actively in investment decisions. Transparency will guide bond execution, with all payments subject to strict verification to prevent inflated claims.
Finance ministry officials stressed that the updated MTEF will present realistic debt obligations and revenue expectations. They also linked power sector reforms to broader economic goals, including higher industrial output and reduced reliance on diesel-powered generation.