Reported by Ariajegbe Sylvia Esezobor
The Federal Government has raised approximately ₦729 billion through a second bond issuance aimed at clearing verified legacy debts owed to electricity generation companies, in what officials describe as the largest single intervention of its kind in Nigeria's power sector in more than a decade.
The transaction, formalised at a signing ceremony in Abuja, was disclosed by the Nigerian Bulk Electricity Trading Plc, the state-owned entity managing the bond programme on behalf of government. According to Akin Odeyemi, Managing Director and Chief Executive Officer of NBET, the Series 2 issue has an aggregate value of approximately ₦729 billion, more precisely put at ₦728.98 billion, and was implemented in two tranches. The total sum comprises ₦402 billion in cash bonds raised directly from the capital market and ₦326.979 billion in non-cash bonds allotted to participating electricity generation companies, commonly known as GenCos. Odeyemi said the issuance, launched in August, involved 11 generation companies, an increase from the eight companies that took part in the first series earlier in the year.
Speaking at the ceremony, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, described the transaction as addressing one of the most persistent structural weaknesses in Nigeria's electricity market: a decade-long accumulation of unpaid and unverified obligations owed to generation companies and gas suppliers. He noted that the earlier ₦501 billion Series 1 bond, issued in January, had already proven that government could keep its commitments, pointing to the timely settlement of its first coupon payment as evidence of that reliability. "The first series proved that government keeps its commitments. Investors reward execution, not promises, and every commitment honoured today lowers the cost of capital tomorrow," Oyedele said, adding that the bond programme was only one component of a broader set of reforms needed to restore financial sustainability to Nigeria's electricity market.
Also present at the ceremony was Olu Verheijen, Special Adviser to the President on Energy, who disclosed that the Federal Government had, by the time of the signing, paid ₦333 billion of the outstanding debts owed to eight participating generation companies operating a combined 17 power plants. Verheijen said the programme, formally known as the Presidential Power Sector Debt Reduction Programme, was designed to tackle a chronic liquidity crisis that has constrained investment, weakened confidence and threatened the operational viability of Nigeria's electricity supply industry. The Federal Executive Council has approved the issuance of government-backed bonds worth up to ₦4 trillion in total to settle verified obligations across the electricity value chain, of which the combined value of the first two issuances now stands at roughly ₦1.23 trillion.
The Series 1 bond, issued in January, comprised ₦300 billion in cash and about ₦201 billion in non-cash instruments, covering an estimated 22 per cent of verified settlement obligations at the time. Its first coupon and principal repayment, valued at approximately ₦63.5 billion, fell due and was settled in full on July 14, well ahead of the Series 2 signing, a track record officials cited as central to building investor confidence ahead of the larger second issuance. For the Series 2 bond specifically, the offer opened on August 3 and closed on August 14, with a coupon rate determined through a book-building process within an indicative range of 17.85 to 17.95 per cent, payable semi-annually over a seven-year tenor. Settlement on the transaction was expected around August 24, ahead of Monday's formal signing ceremony in Abuja.
The bond programme comes against the backdrop of a protracted and, at times, publicly contentious dispute over the true scale of debts owed to Nigeria's generation companies. The Association of Power Generation Companies, the industry's umbrella body, has repeatedly clashed with government officials over the figures involved. In one notable episode earlier this year, the association's chief executive, Joy Ogaji, rejected reports attributing a newly verified settlement figure of ₦2.8 trillion to the Presidency, describing the claim as inaccurate and insisting that the ₦4 trillion figure approved by President Bola Tinubu following a July 2025 tripartite reconciliation involving GenCos, NBET, the Ministry of Finance and the Office of the Special Adviser on Energy remained the operative commitment. The association has separately warned, at various points over the past year, that the debt burden facing its members had climbed as high as ₦5.6 trillion and, by some accounts, beyond ₦6 trillion, with some generation companies reportedly shutting down or scaling back operations under the financial strain, citing an inability to maintain equipment or meet obligations to gas suppliers and lenders.
Officials have consistently framed the bond issuances as a structural response to that liquidity crisis, rather than a one-off palliative measure. Verheijen and other officials have said that resolving the legacy debt overhang is intended to help beneficiary generation companies meet their own downstream obligations, including payments to gas suppliers, lenders and operations and maintenance contractors, thereby stabilising operations across the broader electricity value chain. The Minister of Finance, for his part, has tied the intervention to wider economic goals, arguing that dependable electricity supply underpins industrial competitiveness, job creation and Nigeria's broader development ambitions, and that continued execution of reforms of this kind is central to attracting long-term investment into the country's power sector.
Whether the latest ₦729 billion tranche meaningfully eases the pressures generation companies say they continue to face remains to be seen, particularly given the scale of the debts some operators have cited in recent months. With roughly ₦1.23 trillion now raised against a ₦4 trillion target, the government faces continued scrutiny over how quickly it can complete the remaining phases of the debt reduction programme, and whether doing so will be enough to restore the liquidity and investor confidence officials say the sector urgently needs.
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