FG Raises N501bn Bond to Begin Settlement of Power Sector Debts

ByMoses Alamu2 days Ago1 Mins read54

The Federal Government has raised N501.02 billion from the bond market to commence the settlement of outstanding debts owed to power generation companies (GenCos), as part of efforts to address over N6 trillion liabilities in Nigeria’s electricity sector.

The funds were mobilised through the issuance of two seven-year bond tranches by NBET Finance Company Plc, a special purpose vehicle established by the Nigerian Bulk Electricity Trading Plc (NBET). The bonds include a N300 billion Series 1 Tranche A and a N201.02 billion Series 1 Tranche B, both priced at 17.50 per cent and fully guaranteed by the Federal Government under the Presidential Power Sector Debt Reduction Programme (PPSDRP).

Speaking at the agreement signing ceremony in Lagos, the Special Adviser on Energy to President Bola Tinubu, Mrs. Olu Verheijen, said the initiative was designed to resolve long-standing payment arrears owed to GenCos and reset the electricity market. She explained that verified receivables for electricity supplied between February 2015 and March 2025 are being settled through negotiated agreements.

According to Verheijen, 14 generation companies have signed Full and Final Settlement Agreements with a total negotiated value of about N827 billion. She disclosed that proceeds from the Series 1 bond issuance would fund first and second instalment payments estimated at N421.42 billion, representing about 50 per cent of the agreed settlement value. The payments, she added, would be made through a combination of cash and promissory notes.

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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, said unresolved legacy debts had constrained growth in the power sector for years. She stressed that clearing the arrears was critical to restoring confidence and driving sustainable reforms.

NBET Acting Managing Director, Mr. Johnson Akinnawo, described the bond issuance as a major milestone that would improve liquidity across the power value chain and unlock new investments.

Some of the GenCos that signed the agreements include First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited and Niger Delta Power Holding Company Limited.