FG Raises N501bn from Bond Market to Settle Power Sector Debt
The Federal Government has raised N501.02 billion from the domestic bond market to begin settling outstanding debts owed to electricity generation companies (GenCos), as part of a broader plan to reduce over N6 trillion liabilities in Nigeria’s power sector.
The funds were mobilised through the issuance of two seven-year bond tranches under the Presidential Power Sector Debt Reduction Programme (PPSDRP). The bonds comprise a N300 billion Series 1 Tranche A and a N201.02 billion Series 1 Tranche B, both priced at a coupon rate of 17.50 per cent.
The bonds were issued by NBET Finance Company Plc, a special purpose vehicle established by the Nigerian Bulk Electricity Trading Plc (NBET), and are fully guaranteed by the Federal Government.
Speaking at the signing ceremony in Lagos, the Special Adviser to President Bola Tinubu on Energy, Mrs Olu Verheijen, said the initiative was aimed at resolving long-standing payment arrears owed to GenCos and resetting the electricity market for sustainable growth.
According to her, the programme targets verified receivables for electricity supplied between February 2015 and March 2025, which are being settled through negotiated agreements with power producers.
Verheijen disclosed that 14 generation companies have so far signed Full and Final Settlement Agreements, with a total negotiated value of about N827 billion.
She explained that proceeds from the Series 1 bond issuance would be used to fund first and second instalment payments to participating GenCos, estimated at N421.42 billion, representing approximately 50 per cent of the negotiated settlement value.
“Payments will be made through a combination of cash and promissory notes, ensuring immediate liquidity for generation companies while supporting long-term market stability,” she said.
Also speaking, the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, represented by the Director-General of the Debt Management Office (DMO), Ms Patience Oniha, acknowledged that legacy debts in the power sector had constrained investment and growth for years.
Oniha stressed that resolving the liabilities was critical to restoring confidence, improving sector efficiency and advancing broader electricity market reforms.
In his remarks, the Acting Managing Director of NBET, Mr Johnson Akinnawo, described the bond issuance as a major milestone in strengthening liquidity across the power value chain.
He said the initiative would enhance the financial viability of GenCos, support new investments and ultimately improve electricity supply nationwide.
Some of the generation companies that have signed onto the settlement arrangement include First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited and Niger Delta Power Holding Company Limited.
The Federal Government said the bond-backed settlement plan forms part of ongoing reforms to stabilise the electricity sector, improve power supply and reduce the accumulation of new debts across the industry.
