FG signs ₦729bn bond agreement with GenCos

By Folarin Kehinde, Abuja

ABUJA — The Federal Government has signed a ₦728.979 billion Series 2 bond under its ₦4 trillion Power Sector Debt Reduction Programme to settle verified legacy debts owed to electricity generation companies and improve liquidity in Nigeria’s power sector.

The transaction comprises ₦402 billion in cash bonds raised from the domestic capital market and ₦326.979 billion in non-cash bonds allotted to participating generation companies.

Speaking at the signing ceremony in Abuja, the Managing Director and Chief Executive Officer of Nigerian Bulk Electricity Trading Plc, NBET, Mr Akinola Odeyemi, described the transaction as a major step towards addressing the longstanding financial challenges in the Nigerian Electricity Supply Industry.

Odeyemi said the programme was designed not only to settle historical obligations but also to restore financial confidence, improve liquidity and create conditions for increased investment in electricity generation.

He disclosed that the Series 2 issuance, launched in August 2026, involved 11 generation companies, compared with eight that participated in Series 1.

According to him, the increased participation reflects growing confidence among stakeholders in the Federal Government’s framework for resolving verified outstanding obligations in the power sector.

“Today’s event represents another important milestone in the Federal Government’s efforts to address the longstanding financial challenges confronting the Nigerian electricity supply industry and to strengthen the foundation for a more sustainable and reliable power sector,” he said.

The NBET chief said Series 2 built on the completion of Series 1, which was concluded in January 2026 with an issue size of about ₦501 billion and participation from eight generation companies.

He said the financial challenges in the sector had affected the entire electricity value chain, constrained liquidity and limited the ability of generation companies to invest in expanding their generation capacity.

Odeyemi said the debt reduction programme should therefore be viewed as more than a debt-settlement mechanism, describing it as part of broader efforts to restore financial sustainability in the electricity market.

He added that NBET remained committed to working with government institutions, financial institutions, generation companies and other stakeholders to develop sustainable financial solutions for the sector.

Also speaking, the Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, described the Series 2 transaction as an important step towards resolving accumulated legacy obligations that had weakened liquidity and constrained investment across the electricity market.

Oyedele said the transaction consisted of ₦402 billion in cash bonds raised from the capital market and ₦326.9 billion in non-cash bonds allocated to participating generation companies.

He said the Federal Government’s objective was to resolve legitimate legacy debts in a structured and transparent manner while implementing reforms to prevent similar obligations from accumulating in the future.

The minister, however, said the bond programme could not succeed without improvements in market policy, revenue assurance, reduction of technical and commercial losses, efficiency and accountability across the electricity ecosystem.

He said the transaction also demonstrated the Federal Government’s ability to use the domestic capital market to address major economic challenges while mobilising long-term domestic capital.

Oyedele cautioned that the success of the programme should not be measured solely by the volume of bonds issued.

“Ultimately, the success of this programme will not be measured by the amount or size of bonds that we have issued. It will be measured by whether we achieve a financially sustainable electricity market that can attract investments, meet its obligations and deliver more reliable power to Nigerian households and businesses,” he said.

The Senior Special Adviser to the President on Energy, Olu Verheijen, represented at the event by Iriye Onaguruwa, said Series 2 marked a major expansion of the Presidential Power Sector Financial Reform Programme.

She recalled that an investor forum was held two months earlier to introduce the Series 2 issuance, adding that the signing ceremony marked the completion of that phase of the transaction.

Verheijen said the programme was anchored on President Bola Tinubu’s vision of transforming the power sector from one characterised by accumulated debts and financial challenges into one capable of delivering reliable electricity.

She disclosed that the government had executed settlement agreements with 11 generation companies representing 21 power plants following negotiations and verification of outstanding obligations.

According to her, Series 1, issued in January 2026, raised about ₦501 billion through a combination of cash and non-cash instruments.

With the completion of Series 2, she said the government had now delivered more than ₦1.1 trillion under the ₦4 trillion programme approved by President Tinubu.

“Series 1 proved the model and Series 2 is scaling it,” she said, describing the latest transaction as a significant increase in the pace and scope of the debt-reduction initiative.

She said the programme was intended to restore trust across the power sector and unlock fresh investment in generation and other parts of the electricity value chain.

Verheijen said the government aimed to move the sector away from recurring liquidity shortages and accumulated obligations towards increased investment and improved electricity supply to households, businesses and industries.

She also commended transaction advisers, issuing houses, legal advisers, trustees, registrars, investors and other stakeholders for their contributions to the transaction.

She said the debt-reduction programme, alongside other government initiatives, including the Presidential Electricity Initiative, would support broader reforms in Nigeria’s electricity sector.

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