FG breaks 10yr jinx with historic N501Bn bond to clear legacy debts
In a decisive move to salvage the nation’s electricity value chain, the Federal Government has successfully raised ₦501 billion through its inaugural bond issuance aimed at clearing over a decade of accumulated debts owed to power generation companies (GenCos).
The bond, issued under the Presidential Power Sector Debt Reduction Programme (PPSDRP), recorded a 100 percent subscription rate, signalling a massive vote of confidence from pension funds, banks, and asset managers in President Bola Tinubu’s strategy to financially engineer a reset of the Nigerian Electricity Supply Industry (NESI).
The historic signing ceremony, held in Lagos on Tuesday marks the beginning of the end for the liquidity crisis that has crippled the sector since 2015. For years, mounting arrears weakened the balance sheets of GenCos, stalling maintenance and halting new investments.
Speaking at the event, the Special Adviser to the President on Energy, Mrs. Olu Arowolo Verheijen, described the programme as a decisive reset for the market.
She noted that the Series 1 issuance comprising ₦300 billion raised from the capital market and ₦201 billion in bonds allotted to GenCos is not just about paying debts but about restoring the sanctity of contracts in the sector.
Proceeds from this first tranche will fund the immediate settlement of verified invoices for electricity supplied between February 2015 and March 2025.
Five major power generation companies, representing 14 power plants nationwide, have already executed Settlement Agreements with the Nigerian Bulk Electricity Trading Plc (NBET).
The beneficiaries in this first phase include First Independent Power Limited (FIPL), Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and the Niger Delta Power Holding Company Limited (NDPHC).
The total negotiated settlement for these entities stands at ₦827.16 billion, with the Series 1 proceeds covering the first two installments approximately 50 percent of the debt.
The impact of the liquidity injection was immediately underscored by the private sector. Mr. Kola Adesina, Group Managing Director of Sahara Power Group, which operates the Egbin Power Plant, revealed that the resolution has unlocked immediate expansion plans.
"Capital formation can only come when there is confidence, when you can truly see a line of sight in recovering investments previously made," Adesina stated. "Because we were being owed so much, it was a problem to put in more money. But based on President Tinubu’s commitment, I can say that once this process is over, construction will commence immediately on the second phase of our Egbin Power Plant."
The transaction, led by CardinalStone Partners Limited as the Lead Financial Adviser and Lead Issuing House, is widely seen as a masterstroke in financial engineering.
By securitizing the debts, the government has moved the obligation from a opaque government promise to a transparent, tradable instrument in the capital market.
When fully implemented, the programme is expected to impact over 4,400MW of generation capacity, effectively settling payments for over 290,000GWh of electricity billed over the last decade.
This financial cleanup provides the necessary foundation for companies serving Nigeria's 12 million registered electricity customers to finally invest in capacity enhancement.
Mrs. Verheijen assured stakeholders that the government remains committed to the disciplined implementation of the remaining phases of the programme, inviting other GenCos to join the framework as the administration pushes to build a financially sustainable electricity market capable of powering Nigeria’s long-term economic growth.