The World Bank has stated its opinion on the Federal Government’s plan to settle the N3.3tn debts owed to power-generating companies, with the bank noting that the initiative effectively converts long-standing liabilities in the electricity sector into sovereign debt obligations that must be fully recognised in Nigeria’s fiscal accounts.
It also cautioned the Federal Government over its newly introduced N4tn bond programme aimed at clearing debts in Nigeria’s power sector.
This position was contained in its latest Nigeria Development Update titled, “Nigeria’s Tomorrow Must Start Today – The Case for Early Childhood Development,” obtained by our correspondent on Wednesday, where the global lender stressed that the structure of the programme places a direct and recurring burden on government finances, despite offering short-term liquidity relief to the electricity value chain.
Under a sub-section titled “Treating the sovereign-guaranteed bond programme as public debt,” the World Bank examined the Federal Government’s plan to resolve legacy arrears owed to power generation companies and gas suppliers through a securitisation framework backed by sovereign guarantees.
The report noted that the government had launched a N4tn multi-tranche bond programme under the Presidential Power Sector Debt Reduction Programme, targeting debts accumulated between 2015 and April 2025.
