FG Signs 728.9bn Power Bond, Formalises Financing Deal to Offset Gencos’ Debt

The Nigerian federal government officially signed the financing documents for a N728.9 billion Series 2 power sector bond, completing a transaction aimed at settling part of its N4 trillion debt owed to the electricity market. The signing took place in Abuja, formalizing the arrangement following prior approval for Series 2 Tranche B, after the earlier issuance of Series 2 Tranche A.

This marks the combined value of the two bond issuances at N1.23 trillion within nine months, highlighting the government's ongoing effort to tackle legacy debts and improve financial stability in the electricity market. Speaking at the event, Finance Minister Taiwo Oyedele emphasized that debt settlement alone would not solve the sector's issues, asserting that the financing must be complemented by reforms and market discipline to ensure sustainability.

The bond raised N402 billion in cash from the capital market and N326.9 billion in non-cash bonds allocated to Generation Companies (Gencos) under the Presidential Power Sector Debt Reduction Programme (PPSDRP). These transactions addressed accumulated legacy obligations that had weakened liquidity and investment in the electricity sector. Oyedele stressed that resolving debts alone would not suffice without addressing the factors contributing to future debt accumulation.

NBET CEO Akin Odeyemi described the Series 2 issuance as a significant milestone, noting that it involved 11 participants compared to eight under Series 1, reflecting growing confidence in the programme. The programme aims to not only settle historical debts but also restore financial confidence, liquidity, and sustainability to Nigeria's power sector.

The success will be measured by the program's ability to create a financially sustainable and reliable electricity market that attracts investments and meets the needs of households and businesses.