In August 2025, somewhere in the corridors of Federal Power, a decision was made that would expose the fragility of Nigeria’s entire regulatory architecture. The creation of NBET Finance Company PLC to issue four trillion naira in bonds appeared, on its surface, as a pragmatic solution to an intractable problem. Beneath that surface, however, lay a fundamental repudiation of the very principles that sustain functional markets: regulatory oversight, corporate accountability, and the rule of law. The Nigerian Bulk Electricity Trading Company had accumulated debts to power generation companies that threatened to collapse an already precarious system. Payment obligations mounted while collections faltered, creating a vicious cycle familiar to anyone who has observed Nigeria’s power sector over the past two decades. The solution devised by federal authorities was to establish a special purpose vehicle that would assume these debts and refinance them through bond issuances backed by sovereign guarantee. On paper, this sounds reasonable. In practice, it represents something far more troubling. What emerged was not a properly structured subsidiary operating under parental oversight, but an orphan entity deliberately positioned beyond the reach of the Nigerian Electricity Regulatory Commission. NBET Finance Company PLC was incorporated with share capital of twenty-five million naira, an amount so negligible in comparison to its stated purpose that it reveals the entire structure as theater. This company, tasked with managing obligations four hundred thousand times larger than its capitalization, exists not as a genuine commercial enterprise but as a mechanism for institutional evasion. The shareholding structure tells its own story. Sankore Securities Limited controls virtually all equity, with only a single share held by an individual. This is not diversified ownership designed to ensure accountability. This is concentrated control vested in a private financial services firm for an entity that will be handling public sector obligations guaranteed by the federal government. The questions this raises about beneficial ownership, conflicts of interest, and proper governance are profound, yet they appear to have been asked by no one in authority before the structure was approved. Corporate governance, that mundane-sounding concept that separates functional institutions from elaborate frauds, is entirely absent from this arrangement. The company’s board composition resembles a revolving door, with directors resigning shortly after appointment and being replaced by individuals whose addresses trace back to the controlling securities firm. There are no independent directors, no oversight mechanisms, no governance structures that would give confidence to investors or creditors. The Code of Corporate Governance for the Nigerian Electricity Supply Industry, implemented by NERC in 2025 with mandatory compliance requirements, might as well not exist for all the attention paid to it in this structure. What makes this arrangement particularly pernicious is its studied avoidance of regulatory authority. NBET operates under a license from NERC, a license that explicitly defines the scope of permissible activities and imposes obligations regarding financial capacity, governance standards, and operational transparency. That license does not authorize the creation of subsidiaries or special purpose vehicles to assume market liabilities. Yet NBET Finance Company PLC was established without seeking NERC’s approval, without obtaining a license of its own, without any acknowledgment that the electricity regulator might have legitimate interest in an entity being created to handle obligations arising from electricity trading activities. This creates a regulatory vacuum with profound implications. NERC regulates NBET but has no authority over NBET Finance Company. The Securities and Exchange Commission regulates bond issuances but lacks jurisdiction over power sector operations. The Debt Management Office manages federal borrowing but this SPV technically isn’t federal government borrowing in the traditional sense. Each regulator sees only part of the picture, and the whole escapes oversight entirely. The contractual architecture compounds these problems. Power purchase agreements exist between NBET and generation companies, creating legally enforceable obligations under regulatory supervision. The proposed settlement attempts to novate these obligations to an entity that was never party to the original contracts, that lacks regulatory standing in the power sector, and that has no operational capacity beyond issuing bonds. Generation companies are being asked to exchange claims against a licensed federal government entity for claims against a private company whose only asset is a sovereign guarantee that may prove far more difficult to enforce than the original contractual rights. Distribution companies face similar displacement. Their payment obligations under vesting contracts are being pledged as security for bonds issued by an entity they have no contractual relationship with. They could legitimately refuse to recognize this assignment, arguing they agreed to pay NBET under regulatory supervision, not an unlicensed third party. If even a fraction of distribution companies challenge this arrangement, the revenue stream meant to service the bonds evaporates. The precedent being established extends far beyond this single transaction. If federal government entities can circumvent regulatory oversight by creating unlicensed subsidiaries, the entire licensing regime collapses. What prevents distribution companies from establishing special purpose vehicles to assume their own debts to generation companies? What stops transmission operators from creating orphan entities to avoid regulatory penalties? The Nigerian Electricity Regulatory Commission has spent two decades building a framework to bring order to chaos. This structure, if permitted to stand, renders that framework meaningless. Pension funds have invested hundreds of billions of naira in these bonds, despite governance red flags that should have triggered alarm. The National Pension Commission establishes strict criteria for pension fund investments precisely to protect workers’ retirement savings from instruments that fail basic governance and compliance standards. Yet approximately half of the initial bond issuance was subscribed by pension fund administrators, suggesting either inadequate due diligence or pressure to participate despite obvious deficiencies. Public procurement requirements appear to have been disregarded entirely. The Public Procurement Act mandates competitive processes for significant government contracts and requires certificates of no objection from the Bureau of Public Procurement. There is no evidence that the selection of this special purpose vehicle followed any competitive procedure, that alternative structures were evaluated, or that proper approvals were obtained. The entity simply materialized, blessed by political authority but lacking procedural legitimacy. What we witness in the NBET Finance Company structure is not innovative finance but institutional decay. It represents the triumph of expedience over principle, of political convenience over regulatory integrity, of short-term problem displacement over long-term system building. The debts owed to generation companies are real and must be addressed. But addressing them through mechanisms that undermine the very regulatory frameworks meant to prevent such crises in the future is not resolution. It is recursion, creating the conditions for the next crisis even while claiming to resolve the current one. Nigeria’s power sector has been called many things over the years: broken, dysfunctional, irredeemable. What the NBET Finance Company arrangement reveals is something more fundamental. This is not mere dysfunction. This is active institutional sabotage, the deliberate construction of structures designed to evade accountability while maintaining the appearance of governmental action. Until regulatory authorities assert their authority, until proper governance replaces governance theater, until compliance becomes non-negotiable rather than optional, the lights will remain off and the debts will continue to mount. The house built on sand cannot stand, no matter how impressive the architectural drawings. —Adetayo Adegbemle is a public opinion commentator/analyst, researcher, and the convener of PowerUpNigeria, an Electric Power Consumer Right Advocacy Group, based in Lagos. (Twitter: @gbemle, @PowerUpNg)