Energy

The African Development Bank (AfDB) has approved a $3.9 million, two-year technical assistance project to support Nigeria and 12 other African countries in implementing their national energy compacts under the Mission 300 initiative, aimed at expanding electricity access across the continent by 2030.

The approval was granted by the AfDB Board of Directors and disclosed in a statement published on the bank’s website on Friday.

The project is designed to help participating countries translate energy policy commitments into concrete electricity connections for households, businesses, and public institutions, addressing one of the key bottlenecks in Africa’s power sector — the gap between planning and actual delivery.

The initiative comes as African governments intensify efforts to close the continent’s electricity access deficit, which continues to limit economic growth, industrialisation, and social development.

According to the AfDB, the project will provide hands-on technical assistance to help countries move from high-level policy frameworks to practical implementation of reforms and connection programmes.

Wale Shonibare, Director of Energy Financial Solutions, Policy and Regulation at the AfDB, said countries have made “bold commitments” through their Energy Compacts, and the new phase of support is focused on turning those commitments into tangible results.

He noted that the emphasis is on ensuring that households, entrepreneurs, and communities actually gain access to reliable electricity, rather than remaining at the level of policy pledges. He added that the project will help governments implement reforms faster and accelerate electricity connections.

Mission 300 was launched in January 2025 by the World Bank and the African Development Bank with the goal of providing electricity access to 300 million Africans by 2030.

As part of the initiative, participating countries developed National Energy Compacts, which outline plans to expand electricity access, strengthen power sector institutions, improve utility performance, and attract private sector investment.

While dozens of countries have launched these compacts, the AfDB said progress has been slowed by challenges in translating plans into actual infrastructure, reforms, and customer connections. The newly approved project is intended to close this implementation gap.

The project, known as AESTAP Mission 300 Phase II, will provide direct technical support to 13 Mission 300 countries over the next 24 months.

Beneficiary countries include Nigeria, Kenya, Ethiopia, Tanzania, Uganda, the Democratic Republic of Congo, Chad, Gabon, Madagascar, Malawi, Lesotho, Mauritania, and Namibia.

The AfDB said the project will support improvements in electricity regulations, planning frameworks, and tariff structures to unlock investment and strengthen the financial sustainability of power utilities.

It will also focus on reducing technical and commercial losses, improving utility performance, and enhancing data, research, and peer learning through tools such as the Electricity Regulatory Index and regional energy forums.

In addition, expert advisers will be embedded within national Compact Delivery and Monitoring Units to help governments coordinate reforms, monitor progress, and ensure accountability in implementation.

The approval of Phase II builds on AESTAP Mission 300 Phase I, which was approved by the AfDB in December 2025 with about $1 million in funding.

Phase I focused on establishing and operationalising Compact Delivery and Monitoring Units within government structures. Phase II will build on that foundation by providing deeper technical assistance to implement planned reforms and accelerate electricity access.

The AfDB said the project will be implemented in close coordination with other Mission 300 partners, including the World Bank, national governments, and development organisations, to ensure alignment and avoid duplication of efforts.

Beyond Mission 300, the AfDB has continued to scale up financial support for Nigeria and the wider region.

In November, the bank approved a $500 million loan to the Federal Government of Nigeria to finance the second phase of the Economic Governance and Energy Transition Support Programme.

The AfDB has also approved a $100 million loan to the Emerging Africa and Asia Infrastructure Fund to support sustainable infrastructure development across Africa.

The Federal Government has successfully recorded a 100 per cent subscription for its N501 billion inaugural power sector bond issued under the Presidential Power Sector Debt Reduction Programme (PPSDRP), a development that signals renewed investor confidence in Nigeria’s electricity market reforms.

The milestone was disclosed on Tuesday by the Special Adviser to the President on Energy, Mrs. Olu Arowolo Verheijen, in a statement shared via X (formerly Twitter). According to her, the full subscription underscores growing market trust in the government’s strategy to resolve long-standing liquidity challenges that have weighed down the Nigerian Electricity Supply Industry (NESI) for over a decade.

The bond issuance is designed to address accumulated payment arrears owed to power generation companies, restore liquidity across the value chain, and strengthen the financial sustainability of the power sector. Persistent debt overhang has historically constrained generation capacity, discouraged new investments, and weakened the balance sheets of key industry players.

The N501 billion Series 1 Power Sector Bond was issued by NBET Finance Company Plc and closed at full subscription, with N300 billion raised from the capital markets and N201 billion issued directly to participating generation companies. The transaction represents the first phase of a broader government plan to issue up to N4 trillion in bonds to settle legacy debts owed to electricity generation companies and gas suppliers.

Mrs. Verheijen described the PPSDRP as a decisive reset of Nigeria’s electricity market, combining debt resolution with broader financial and structural reforms. She noted that clearing historical arrears is critical to rebuilding confidence, improving sector governance, and unlocking private capital required for long-term expansion and reliability.

Industry stakeholders have welcomed the development. Group Managing Director of Sahara Power Group, Mr. Kola Adesina, said sustainable capital formation in the power sector can only occur when investors have confidence in the recovery of previously committed funds. He added that following the settlement process, construction would commence immediately on the second phase of Sahara Power’s Egbin Power Plant, signalling how improved liquidity could translate into tangible capacity expansion.

Under the PPSDRP framework, verified receivables for electricity supplied between February 2015 and March 2025 are being settled through negotiated agreements with generation companies. Five power generation firms — First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and Niger Delta Power Holding Company Limited — have already executed settlement agreements with Nigerian Bulk Electricity Trading Plc (NBET).

The negotiated settlement value for the five companies stands at N827.16 billion, to be paid in four phased instalments. Proceeds from the Series 1 bond will fund the first and second instalments, estimated at N421.42 billion, representing about half of the total settlement. Payments will be made through a combination of cash and promissory notes, easing immediate liquidity pressures on the companies.

By clearing historic debts, the programme is expected to significantly strengthen the balance sheets of generation companies, improve their ability to meet operating and debt obligations, and enhance overall sector performance. The initiative is projected to impact 4,483.60 megawatt-hours per hour of generation capacity and finalise settlement for 290,644.84 gigawatt-hours of electricity billed since 2015. It is also expected to benefit companies serving about 12.03 million active registered electricity customers nationwide.

While concerns have been raised in some quarters about potential debt-for-debt risks, the Federal Government insists the bond-backed strategy reinforces fiscal discipline through validated claims, negotiated settlements, and transparent capital market financing. Officials maintain that the reforms will stabilise the power sector, improve electricity supply, and support long-term economic growth.