Federal Govt Set To Settle N1.123trn Power Sector Debt

…Fixes September 14 for agreement signing

The federal government is set to clear over N1.123 trillion in legacy debts owed to electricity generation companies (GenCos), following the completion of the second tranche of bonds under its Power Sector Multi-Instrument Issuance Programme.

Nigerian Bulk Electricity Trading Plc (NBET) said on Wednesday that it had concluded the issuance of the Series 2 bond, valued at N728,979,000,000, under the N4 trillion programme designed to settle outstanding debts in the power sector.

According to NBET, the issuer, NBET Finance Company Plc, has completed the N402,000,000,000 Series 2 (Tranche A) Bonds and secured approval from the Minister of Finance for the N326,979,000,000 Series 2 (Tranche B) Bonds.

The company explained that the Series 2 bond followed the launch of the seven-year, N728.9 billion Amortising Power Sector Bond in August 2026. It said the bond comprised N402 billion in cash bonds sold to the capital market and N326.9 billion in non-cash bonds issued to GenCos participating in the Presidential Power Sector Debt Reduction Programme (PPSDRP).

NBET described the development as a step toward settling legacy debts owed to power generation companies, and said a signing ceremony to commemorate the Series 2 capital raise had been scheduled for Monday, September 14, 2026, in Abuja.

The Series 2 bond builds on an earlier tranche issued under the same programme. The Presidency had disclosed that the inaugural Series 1 bond, valued at N501 billion, recorded a 100 per cent subscription rate from pension funds, banks and asset managers when it was floated.

Officials said the Series 1 bond was similarly structured, comprising N300 billion raised in cash from capital market investors and N201 billion in non-cash instruments allotted directly to participating GenCos.

With the addition of the N728.98 billion Series 2 bond, cumulative issuance under the PPSDRP now stands at over N1.123 trillion, still within the N4 trillion ceiling approved for the wider programme.

Like the Series 1, the Series 2 bond was split into cash and non-cash components to help manage liquidity in the sector. Tranche A, valued at N402 billion, was raised through book-building from capital market investors, while Tranche B, valued at N326.98 billion, was issued as a private placement directly to participating GenCos.

Sources monitoring the programme said funds raised under the bond issuances have gone toward addressing liquidity and gas-supply challenges facing the Nigerian Electricity Supply Industry (NESI).

It was gathered that N333 billion had already been disbursed to eight participating GenCos, covering 17 power plants, out of the overall pool raised under the programme.

The programme’s credibility was said to have been reinforced earlier this year when the first coupon and principal payment on the Series 1 bond, valued at N63.5 billion, was paid on schedule, a development seen as boosting investor confidence ahead of the Series 2 issuance.

The N4 trillion electricity-sector debt accumulated over several years after the 2015 power-sector privatisation. GenCos supplied electricity, but payments through Nigerian Bulk Electricity Trading Plc (NBET) remained inadequate because DisCos were unable to fully remit collections and recover sufficient revenue from consumers.

The debt was further worsened by electricity tariffs that remained below the cost of generating and supplying power. Government-funded tariff shortfalls were not consistently settled, while rising gas prices, foreign-exchange pressures, technical and commercial losses and weak market remittances added to the liquidity crisis. As a result, unpaid GenCo invoices and other market obligations continued to build up.

The federal government is now addressing the verified arrears through the Presidential Power Sector Debt Reduction Programme. Under the N4 trillion bond programme, the government is converting the debts into cash and non-cash bonds so that participating GenCos can be paid over time, rather than through an immediate budgetary settlement