The Federal Government has launched a N4 trillion bond programme to clear decade-old debts owed to power generating companies and gas suppliers accumulated between 2015 and April 2025. The first tranche - a N590 billion bond - has already been issued.

President Tinubu approved the plan as part of the Presidential Power Sector Financial Reforms Programme, with N223 billion already disbursed. The World Bank says the intention is understandable. Nigeria’s electricity sector has been drowning in unpaid invoices for over a decade. Generation companies and gas suppliers have consistently been owed trillions of naira due to tariff shortfalls, market inefficiencies, and government underfunding. Successive administrations have acknowledged the problem but never decisively resolved it - allowing the debts to compound year after year. The bonds are technically issued through a Special Purpose Vehicle linked to the Nigeria Bulk Electricity Trading Plc - but they carry a full Federal Government guarantee. The World Bank explains that this guarantee means the financial risk lands squarely on Nigerian taxpayers. 5 percent.

Both interest and principal will be paid from government revenue over the life of the bonds. The World Bank classifies this as Public and Publicly Guaranteed debt - meaning it must be added to Nigeria’s official debt figures. Clearing power sector debts will improve cash flow to generation companies and potentially stabilise electricity supply - that is a genuine win. The World Bank is not saying do not do it. They are saying be transparent about what it costs - and build it properly into Nigeria’s fiscal planning. Whether the government heeds that advice will determine whether this bold move strengthens the power sector or simply adds another layer to Nigeria’s debt burden.