FG Moves to Clear GenCos’ Debts with ₦729bn Bond

The Federal Government is preparing to issue a ₦729 billion bond as part of efforts to clear outstanding debts owed to electricity generation companies (GenCos), a move expected to ease liquidity challenges in Nigeria’s power sector and pave the way for improved electricity supply.

The proposed bond forms the second phase of the Presidential Power Sector Debt Reduction Programme (PPSDRP) and will complete the first tranche of the government’s wider ₦4 trillion debt settlement plan aimed at resolving years of unpaid obligations within the Nigerian Electricity Supply Industry (NESI).

Under the arrangement, the bond will be issued through NBET Finance Company Plc, a special purpose vehicle established by the Nigerian Bulk Electricity Trading Plc (NBET) to settle verified legacy debts owed to power generation companies. The debt instruments will carry the backing of the Federal Government, reinforcing investor confidence in the programme.

The latest fundraising initiative comes on the heels of the successful issuance of a ₦501 billion Series 1 bond, which was fully subscribed by institutional investors, including pension fund administrators, commercial banks and asset management firms. The strong investor response has been viewed as a vote of confidence in the government’s ongoing reforms in the electricity sector.

NBET’s Managing Director and Chief Executive Officer, Johnson Akinnawo, described the planned ₦729 billion bond as a critical step towards addressing the long-standing liquidity crisis that has weakened the country’s electricity value chain. According to him, settling verified debts will strengthen the financial position of GenCos, boost investor confidence and encourage greater investment in electricity generation.

For years, Nigeria’s power sector has grappled with mounting debts that have left many generation companies struggling to meet obligations to gas suppliers, maintain infrastructure and expand production capacity. The Federal Government has repeatedly identified the debt burden as a major obstacle to delivering stable and reliable electricity across the country.

Officials believe the broader debt resolution programme will improve cash flow throughout the power value chain, enhance the financial sustainability of industry players and create a more attractive environment for private sector investment.

Once issued, the ₦729 billion bond will raise the value of the first phase of the government’s power sector debt settlement programme to ₦1.23 trillion, marking another significant milestone in efforts to restore confidence and long-term viability to Nigeria’s electricity industry.