FG seals N729bn power bond, completes Phase 1 of GenCo debt clearance

The Federal Government has completed the first phase of its ambitious power sector debt resolution drive, raising N728.979 billion through a second bond issuance that brings total funds mobilised under the programme to approximately N1.23 trillion.

The Series 2 transaction under the N4 trillion Power Sector Multi-Instrument Issuance Programme was formalised at a signing ceremony in Abuja on Monday. It comprises N402 billion in cash bonds subscribed by capital market investors and N326.979 billion in non-cash bonds allotted directly to participating generation companies (GenCos) under the Presidential Power Sector Debt Reduction Programme.

Eleven GenCos are taking part in this phase, up from eight under the inaugural Series 1 issuance of N501.021 billion completed in January 2026. Officials said the higher participation signals growing confidence in the structured settlement framework.

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Minister of Finance and Coordinating Minister of the Economy Taiwo Oyedele described the deal as a targeted response to long-standing legacy obligations that have drained liquidity, limited investment and undermined confidence across the electricity value chain.

“This transaction addresses an important challenge in Nigeria’s electricity markets, which is accumulated legacy obligations that have weakened liquidity, constrained investments, and affected confidence across the value chain,” Oyedele said. “The federal government’s objective is to resolve legitimate legacy obligations in a structured and transparent manner, while implementing the reforms necessary to prevent their recurrence.”

He stressed that the bond programme cannot succeed in isolation. Stronger market discipline, improved revenue assurance, lower technical and commercial losses, and greater efficiency and accountability across the sector are essential, he said. Success will ultimately be judged not by the volume of bonds issued but by whether Nigeria achieves a financially sustainable electricity market capable of attracting investment, meeting its obligations and delivering more reliable power to homes and businesses.

Nigerian Bulk Electricity Trading Plc Chief Executive Officer Akinola Odeyemi confirmed that the Series 2 bond, structured in two tranches, will help restore the ability of market participants to meet commitments and free GenCos to invest in additional generation capacity.

“The increased participation is a positive development and reflects the growing confidence of stakeholders in the programme and its ability to provide a credible framework for addressing verified outstanding obligations to the sector,” Odeyemi said. He added that the debt reduction effort must be seen as part of a wider push to restore financial confidence, liquidity and sustainability to the Nigerian electricity supply industry.

Special Adviser to the President on Energy Olu Verheijen noted that Series 1 had already produced settlement agreements with generation companies covering 21 power plants and proved the model’s viability. Series 2, she said, scales that success. The two issuances together have delivered more than N1.1 trillion within the N4 trillion ceiling approved by the Federal Executive Council in August 2025.

Michael Nzewi of CardinalStone, lead issuing house and financial adviser, called the transaction the largest fund issuance in the history of the Nigerian capital market. It attracted a broad investor base that included pension fund administrators, banks, sovereign wealth funds, asset managers and retail participants.

The bonds are seven-year amortising instruments fully guaranteed by the Federal Government and issued through NBET Finance Company Plc. Proceeds are directed at verified outstanding claims accumulated largely between February 2015 and March 2025.

Officials acknowledge, however, that the sector still faces a structural annual revenue shortfall estimated at about N1.7 trillion, driven by non-cost-reflective tariffs and collection inefficiencies. Debt clearance alone will not restore health; complementary reforms on tariffs, metering, loss reduction and payment discipline remain critical.

With Phase 1 now complete, attention turns to disciplined implementation of the accompanying market reforms so that the liquidity injected translates into improved generation, more reliable supply and a power sector that can support Nigeria’s economic growth.