FG launches N729 billion bond to complete power sector debt reduction phase

The Federal Government has launched a N729 billion bond under the second series of its Presidential Power Sector Debt Reduction Programme to settle verified legacy debts owed to electricity generation companies (GenCos) and facilitate payments to generation companies, gas suppliers and other service providers.

The bond was launched by the Nigerian Bulk Electricity Trading (NBET) Plc in Abuja at an investors’ forum organised in conjunction with CardinalStone.

The second bond issuance follows the government’s deployment of about N501 billion under the first series in February 2026, comprising N300 billion in cash and N201 billion in non-cash bond instruments, to settle part of the verified debts owed to GenCos.

The programme is aimed at addressing the liquidity crisis in Nigeria’s electricity market, restoring the commercial viability of the sector and improving investor confidence across the electricity value chain.

What they are saying

Special Adviser to the President on Oil and Gas, Olu Verheijen, said the first series of the programme had demonstrated the Federal Government’s commitment to honouring its obligations and helped restore confidence among investors and market participants.

• “Markets do not reward promises; they reward performance. Capital follows credibility,” Verheijen said.
• The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, who also spoke at the event, said, “Investors do not reward intentions; they reward execution. Every commitment honoured today reduces the cost of capital tomorrow.”

Power Minister Joseph Tegbe said the debt reduction programme should be viewed as a key economic reform designed to restore the commercial viability of Nigeria’s electricity market.

• “Our destination is clear: a financially sustainable, investment-led electricity market that powers Nigeria’s industrial renaissance,” Tegbe said.

Verheijen said the second series would deepen market liquidity and strengthen the financial foundation required to attract long-term private investment in the power sector.

On investor participation in the first series, Onyebuchim Obiyemi, Head of Investment Banking at CardinalStone, said pension fund administrators (PFAs) accounted for about N150 billion of the N300 billion raised in cash under Tranche A.

• “The banks came in very strong. We have about 41.5% of the first issuance from the commercial banks. Asset managers got about N17 billion or 5.8% of the offer size,” Obiyemi said.

She said the organisers were seeking to broaden the investor base for the second series by attracting asset managers, insurance companies, family offices and other institutional investors.

Obiyemi said the first series was priced at 17.5% for the seven-year instrument.

Backstory

The Federal Executive Council approved a N4 trillion Power Sector Debt Reduction Initiative after the government conducted a comprehensive verification of outstanding liabilities.

• The verification exercise reduced outstanding claims from more than N4 trillion to about N3.3 trillion through line-by-line validation of services rendered.
• Under the first series of the programme, N333 billion has so far been paid to eight participating GenCos covering 17 power plants.
• The first coupon payment of about N63.5 billion on the seven-year bond was made in full on July 14, 2026.

The timely settlement enabled participating generation companies to meet obligations to gas suppliers, lenders and operations and maintenance contractors.

The government said the second bond issuance would complete the first phase of the debt settlement programme and extend payments to more participants across the electricity value chain.

What you should know

The government has positioned the bond programme as part of broader reforms aimed at strengthening public finances, improving infrastructure financing and mobilising long-term private capital for strategic sectors.

The programme is also intended to improve electricity reliability, support businesses and strengthen the financial foundation of the power sector.

The Federal Government said the successful execution of the first series and the second bond issuance would help restore confidence in the electricity market and support the transition towards a financially sustainable, investment-led power sector.