The Federal Government has launched a N729 billion bond under the second phase of its Presidential Power Sector Debt Reduction Programme to clear verified legacy debts owed to electricity generation companies and improve liquidity across Nigeria’s power sector.

The bond was unveiled on Tuesday by the Nigerian Bulk Electricity Trading (NBET) Plc during an investors’ forum held in Abuja in partnership with CardinalStone.

The new issuance follows the first phase of the programme introduced in February 2026, when the government deployed about N501 billion—comprising N300 billion in cash and N201 billion in non-cash bond instruments—to settle part of the outstanding obligations owed to power generation companies.

The debt reduction programme is designed to address persistent liquidity challenges in the electricity market, strengthen the sector’s financial sustainability and boost investor confidence throughout the power value chain.

Speaking at the event, the Special Adviser to the President on Oil and Gas, Olu Verheijen, said the successful implementation of the first phase demonstrated the government’s commitment to meeting its financial obligations and rebuilding confidence among investors.

She noted that consistent execution of government commitments would strengthen market credibility and attract more private capital into the sector.

Also speaking, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said delivering on financial commitments would lower the cost of capital over time by reinforcing investor confidence.

Minister of Power Joseph Tegbe described the debt settlement programme as a critical economic reform aimed at restoring the commercial viability of Nigeria’s electricity industry and laying the foundation for an investment-driven power market capable of supporting industrial growth.

According to Verheijen, the second bond issuance is expected to further improve market liquidity and create the financial stability needed to attract long-term private investment into the electricity sector.

Providing details on investor participation in the first issuance, Head of Investment Banking at CardinalStone, Onyebuchim Obiyemi, said pension fund administrators contributed about N150 billion of the N300 billion raised under the cash tranche, while commercial banks accounted for 41.5 per cent of subscriptions. Asset managers, she added, invested about N17 billion, representing 5.8 per cent of the offer.

She said the second issuance is targeting broader participation from institutional investors, including insurance firms, family offices and asset management companies. Obiyemi also disclosed that the first seven-year bond was priced at an interest rate of 17.5 per cent.

The bond programme forms part of a broader N4 trillion Power Sector Debt Reduction Initiative approved by the Federal Executive Council after a government verification exercise reduced outstanding claims from more than N4 trillion to about N3.3 trillion.

Under the first phase, the government has paid N333 billion to eight electricity generation companies operating 17 power plants. It also settled the first coupon payment of approximately N63.5 billion on the seven-year bond on July 14, 2026, enabling participating GenCos to meet obligations to gas suppliers, lenders and maintenance contractors.

According to the government, the latest bond issuance will complete the first phase of the debt settlement programme while extending payments to additional participants across the electricity value chain.

The Federal Government said the initiative is part of wider reforms to strengthen public finances, improve infrastructure funding and attract long-term private investment, with the ultimate goal of delivering a financially sustainable electricity market and more reliable power supply for businesses and households.