Nigeria plans to raise 729 billion naira through the second tranche of its Power Sector Multi-Instrument Issuance Programme in a bid to clear legacy debts in Nigeria’s electricity industry. According to the issuance timetable, the bond offer will open on the 3rd of August 3, close on the fourteenth and achieve funding on the 24th of next month subject to regulatory approvals. Kingsley Mafua, Associate at A02 Law joins CNBC Africa for more developments shaping Nigeria’s electricity market
Wed, 22 Jul 2026 15:07:35 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
Key Points:
- Nigeria plans to issue a ₦729 billion second-tranche power bond in August to clear legacy debts in the electricity sector.
- The offer is scheduled to open on Aug. 3, close on Aug. 14 and fund on Aug. 24, subject to regulatory approvals.
- AO2 Law associate Kingsley Mba said the first ₦501 billion tranche was successful and its July coupon payment helped strengthen investor confidence.
- Mba said the bond programme addresses historical debt but does not prevent fresh arrears from building if discos and other market participants continue to struggle with remittances and revenue collection.
- He said investors will focus on tariff predictability, contract enforcement and regulatory stability when assessing the new offer.
- Mba said he expects the second tranche to attract full subscription, though he warned Nigeria must fix its domestic electricity market to strengthen confidence in regional power trade.
Topics
Nigeria power sectorPower bondElectricity marketInfrastructure financeLegacy debtAO2 LawWest African Power PoolInvestor confidenceEnergy financeCNBC Africa
- Nigeria plans to raise ₦729 billion through the second tranche of its Power Sector Multi-Instrument Issuance Programme to clear legacy debts in the electricity industry.
- The bond offer is scheduled to open on Aug. 3, close on Aug. 14 and fund on Aug. 24, subject to regulatory approvals.
- Kingsley Mba, an associate at AO2 Law, told CNBC Africa he expects the offer to be fully subscribed after the first ₦501 billion tranche was fully taken up and its first coupon was paid in July.
- Mba said the refinancing improves confidence, but warned it does not solve the sector’s underlying liquidity and revenue collection problems.
Nigeria is set to raise ₦729 billion in August through the second tranche of its power sector bond programme, as the government seeks to clear legacy electricity debts and reassure investors after a fully subscribed ₦501 billion debut earlier this year.
According to the issuance timetable cited during a CNBC Africa interview, the offer will open on Aug. 3, close on Aug. 14 and achieve funding on Aug. 24, subject to regulatory approvals. The planned issuance forms part of the government’s broader effort to address long-standing obligations owed across the electricity value chain.
The proposed sale comes after the first tranche of the Power Sector Multi-Instrument Issuance Programme recorded a 100% subscription in January. Market participants are now watching whether the second and larger offer can attract similar demand as investors assess both the government’s payment record and the sector’s unresolved structural weaknesses.
Kingsley Mba, associate at AO2 Law, said the first tranche had largely achieved its immediate purpose by refinancing part of the legacy debt owed to existing generation companies.
“The first tranche was a very successful outing,” Mba said on CNBC Africa. “It achieved exactly what it was designed to do.”
He added that the payment of the first coupon in July helped reinforce market confidence by showing the government had moved beyond verbal commitments to actual debt servicing. In his view, honoring the Series 1 obligation signaled a more deliberate attempt to strengthen the power market’s financial credibility.
Still, Mba cautioned against treating the success of the initial bond sale as evidence that Nigeria’s electricity market liquidity problems have been fully resolved.
“We should not confuse the successful bond issuance with a fully covered electricity market,” he said.
That distinction is central to investor sentiment. While the programme is designed to refinance historical obligations, it does not by itself stop new debts from accumulating if core payment and collection problems remain in place.
Mba said arrears in 2025 and 2026 could continue to rise if electricity distribution companies, or discos, and the Nigerian Bulk Electricity Trading framework do not achieve full monthly remittances. That means the bond programme may ease pressure on inherited liabilities, while leaving open the question of how the market avoids rebuilding another debt overhang.
The risk is particularly important for investors considering the second tranche. For many buyers, subscription will depend not only on the government’s willingness to repay, but also on whether the market structure can support predictable cash flows over time.
Mba said investors would be focused on certainty of returns, tariff stability, contract sanctity and the strength of the regulatory framework.
“Investors want to know that there is certainty for return for their money,” he said. “They want to know that when they invest money into the power sector, that there’s going to be money.”
He said tariff predictability remains a major issue, especially if pricing adjustments are abrupt or politically contested. He also pointed to the importance of honoring contracts, arguing that investors will remain cautious if they believe they may need to fight to secure expected returns.
Regulation is another factor. Mba said the Electricity Act signed in 2023 was intended to strengthen the sector, but added that legal reform alone would not remove the commercial risks that still weigh on Nigeria’s power market.
His comments underscore the tension at the center of the new issuance. On one hand, the government can point to the first tranche’s full subscription and the timely servicing of its first coupon as evidence of execution. On the other, the market still faces chronic under-collection, weak remittances and persistent liquidity shortfalls across discos, generation companies and gas suppliers.
Even so, Mba said he expects investors to back the second offer.
“I do believe that they are going to receive a 100% pass mark,” he said, referring to the likely subscription outcome. He added that official confirmation that payments had been made to 17 companies should support confidence in the next tranche.
That view suggests the government’s near-term credibility with investors may hold, even if the sector’s deeper financial imbalances are not yet fixed. A full subscription would also provide a measure of support for authorities trying to stabilize the electricity market without waiting for slower-moving structural reforms to take effect.
The broader policy question, however, is whether refinancing old debt can translate into better payment discipline across the rest of the value chain. If distribution companies continue to struggle with billing efficiency and revenue collection, the market may remain vulnerable to fresh arrears regardless of how much historical debt is cleared through bond issuance.
The issue also has implications beyond Nigeria’s domestic market. During the interview, Mba pointed to the West African Power Pool’s 20-year effort to build regional electricity integration, saying cross-border trade can only deepen if Nigeria first resolves its own internal supply and market weaknesses.
He said West Africa has made progress in integrating electricity systems and promoting regional trade, but argued that Nigeria must fix its domestic market before it can credibly play a leading role in regional electricity exports.
“If the Nigerian problem is not fixed, it doesn’t bolster any confidence across the regional markets,” Mba said.
That leaves investors with a two-track story heading into August. The immediate case for the bond rests on government follow-through, a demonstrated coupon payment and the precedent of a fully subscribed first tranche. The medium-term case depends on whether tariff clarity, contract enforcement and revenue discipline improve enough to stop the power sector’s debt cycle from re-emerging.
With the offer due to open on Aug. 3, investors will be watching not only subscription levels, but also whether the issuance is presented as a bridge to broader reform rather than a standalone fix for a market that still faces significant structural strain.
ChooseCNBC Africaas your preferred in business news
Join readers across the continent. It’s free, and you can unsubscribe at any time.
