Nigeria is preparing to raise approximately 4 trillion naira (about $2.9 billion) from its domestic capital markets to help settle long-standing debts owed to power companies.
According to Bloomberg, the West African state will use the funds to ease persistent electricity shortages that have held back Africa’s second biggest economy.
The government’s plan targets outstanding obligations across the power sector value chain, particularly amounts owed to generation companies and gas suppliers.
These unpaid debts have strained the finances of electricity producers, limiting their ability to maintain and invest in critical infrastructure and contributing to ongoing unreliable power supply.
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This initiative builds on earlier efforts by the Nigerian government to address sector challenges.
In late January, authorities raised 501 billion Naira (about $350 million) through a bond issuance specifically designated to clear verified energy debts, with strong participation from pension funds, banks and asset managers.
Officials say settling these arrears could unlock greater liquidity and encourage fresh investment into the power market.
Nigeria’s power sector has struggled for years due to systemic issues, including weak revenue collection, under-payments by intermediaries, and mounting receivables between power producers and buyers.
These challenges have kept electricity generation below potential, with frequent blackouts affecting households and businesses alike.
Officials hope the larger debt-raising effort will accelerate sector reforms, improve the financial viability of generation companies and reduce the cycle of debt that has hindered reliable electricity supply.
Investment experts say resolving legacy debts and strengthening payment discipline are critical to attracting new capital and stabilising the sector over the long term.
