Precious Nwonu, Enugu
The Federal Government has signed financing documents for a N728.9bn power sector bond aimed at settling part of its outstanding obligations to electricity generation companies and improving liquidity in the power market.
The Series 2 bond was formalised in Abuja on Monday following approval for the issuance of its Tranche B, coming after the earlier Series 2 Tranche A.
The latest transaction brings the value of the Federal Government’s two power sector bond issuances to about N1.23tn within nine months, as authorities seek to address legacy debts estimated at about N4tn across the electricity market.
Speaking at the signing ceremony, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said clearing the accumulated debts must be accompanied by reforms capable of preventing a fresh build-up of obligations.
Oyedele disclosed that the N728.9bn bond comprises N402bn in cash bonds raised through the capital market and N326.9bn in non-cash bonds allocated to participating Generation Companies under the Presidential Power Sector Debt Reduction Programme.
He said the outstanding obligations had weakened liquidity, limited investment and undermined confidence among players across the electricity value chain.
The minister, however, warned that debt settlement alone would not address the sector’s fundamental problems.
“This means the bond programme cannot stand alone. It must be accompanied by stronger market discipline, improved revenue assurance, reduction in technical and commercial losses, greater efficiency and accountability across the electricity ecosystem,” he said.
Oyedele said the government was using the domestic capital market to resolve legitimate legacy obligations in a structured manner while pursuing reforms to ensure the debts did not recur.
He said the real test of the intervention would be whether it resulted in a financially sustainable electricity market capable of attracting investment, meeting its obligations and providing more reliable power to consumers.
The Chief Executive Officer of Nigerian Bulk Electricity Trading Plc, Akin Odeyemi, described the Series 2 issuance as another milestone in efforts to address the financial challenges confronting the electricity supply industry.
Odeyemi said 11 generation companies were participating in the latest issuance, compared with eight under the first series.
He said the wider participation reflected increased confidence in the debt settlement programme and its framework for addressing verified obligations owed to Gencos.
According to him, accumulated debts had affected the ability of market participants to fulfil their obligations and restricted Gencos’ capacity to invest in additional generation.
He said the programme was therefore designed not only to settle historical debts but also to restore liquidity, financial confidence and sustainability across the electricity market.
The Managing Director of CardinalStone Partners, Michael Nwezi, said the completion of the first phase of the N4tn debt settlement programme was significant for both the power sector and Nigeria’s capital market.
Nwezi said the first phase comprised Series 1, which raised N501bn in January 2026, and Series 2, which raised approximately N729bn.
He described Series 1 as a test of investors’ appetite for a structured instrument addressing the complexities of the electricity sector, adding that the success of the first issuance paved the way for the larger Series 2 transaction.
According to him, the latest issuance attracted pension fund administrators, banks, sovereign wealth funds, asset managers and other institutional and retail investors.
He said the strong response demonstrated that investors were willing to provide capital for transformational projects where there was sufficient transparency, visibility and confidence in the repayment structure.
Nwezi said the completion of Series 2 marked the end of the programme’s first phase, with preparations for the second phase expected to commence shortly.
Also speaking, the Special Adviser to the President on Power, Dr Lanre Babalola, said the bond represented an important step towards restoring commercial stability to the electricity market.
Babalola said unresolved obligations had weakened market participants and discouraged investment over the years, but stressed that resolving historical debts was not enough to reform the sector.
He called for measures to prevent new debts from accumulating, including improved payment and revenue collection, reduction in technical and commercial losses, accelerated metering and tariffs that increasingly reflect efficient costs while protecting consumers.
“The objective is ultimately a power sector that can pay its bills, attract investment, and expand reliable electricity supply without requiring government financial intervention,” he said.
The Director-General of the Bureau of Public Enterprises, Ayodeji Gbeleyi, said the Series 2 transaction would help address verified legacy obligations to Gencos while restoring liquidity and investor confidence.
Gbeleyi also cited the successful payment of the first principal component of the Series 1 bond, which became due in July 2026, as evidence of the government’s commitment to meeting its obligations under the programme.
He said complementary measures were being implemented in the distribution segment to improve metering, revenue assurance and network performance while reducing technical, commercial and collection losses.
Representing the Gencos, Sahara Group Chief Executive Officer, Kola Adesina, described the intervention as a confidence-building measure for the electricity industry.
Adesina said clearing the debts should translate into improved liquidity across the value chain, from gas supply and generation to transmission and distribution.
“The industry must now respond with performance,” he said.
He added that improved liquidity should result in increased generation, stronger networks, lower losses, improved revenue collection and greater investment.
Adesina, however, stressed that government intervention could not substitute for commercial discipline, calling for accountability, cost-reflective economics, respect for contracts and a market where all participants fulfil their obligations.
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