FG raises N501bn from bond market to settle GenCos’ debt
The Federal Government of Nigeria has initiated measures to address the substantial debts owed to power generation companies (GenCos) by raising N501.02 billion through the bond market. This effort is part of a broader strategy to reduce over N6 trillion in liabilities within the electricity sector.
The funds were raised by issuing two bond tranches: a N300 billion seven-year Series 1 Tranche A bond and a N201.02 billion seven-year Series 1 Tranche B bond, both yielding 17.50%. The bonds were managed by the NBET Finance Company Plc, a special purpose vehicle established by the Nigerian Bulk Electricity Trading Plc (NBET), and are backed by the Federal Government under the Presidential Power Sector Debt Reduction Programme (PPSDRP).
During a signing ceremony in Lagos, Mrs. Olu Verheijen, the Special Adviser on Energy to President Bola Tinubu, highlighted that the programme aims to settle longstanding payment arrears owed to GenCos and effectively reset the electricity market. She revealed that verified receivables associated with electricity supply from February 2015 to March 2025 will be settled through negotiated agreements with the GenCos. Fourteen generation companies have signed Full and Final Settlement Agreements, with an aggregate negotiated value of approximately N827 billion.
The proceeds from the bond issuance will cover the first and second installment payments to the GenCos, amounting to an estimated N421.42 billion, which is about 50% of the overall negotiated settlement value. Payments will be executed through a combination of cash and notes.
Finance Minister Wale Edun, represented by the Director-General of the Debt Management Office (DMO), Ms. Patience Oniha, acknowledged the longstanding legacy debts in the power sector, emphasizing the importance of resolving these issues to foster growth and reform in the sector.
Mr. Johnson Akinnawo, the Acting Managing Director of NBET, referred to the bond issuance as a significant achievement that would enhance liquidity throughout the power value chain and stimulate new investments.
Among the GenCos involved in this arrangement are First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and Niger Delta Power Holding Company Limited. The settlement of these debts is anticipated to improve the financial health of the electricity sector and facilitate further development and investments in Nigeria’s power infrastructure.
