FG to raise N729bn bond to clear power sector debts, restore liquidity 

The Federal Government is set to raise about N729 billion through a second bond issuance to settle verified legacy debts owed to electricity generation companies (GenCos), as it steps up efforts to restore liquidity to Nigeria’s struggling power sector and attract fresh investment.

The planned issuance, scheduled to be preceded by an Investors’ Forum on July 21, 2026, will bring the total value of the first phase of the Presidential Power Sector Debt Reduction Programme to approximately N1.23 trillion, following the successful issuance of N501 billion in January.

The Nigerian Bulk Electricity Trading Plc (NBET), which disclosed the development on Sunday, said the latest issuance forms part of the Federal Government’s N4 trillion Presidential Power Sector Debt Reduction Programme, approved by President Bola Tinubu to clear longstanding payment obligations across the electricity value chain.

The programme is designed to tackle one of the biggest structural challenges confronting Nigeria’s power sector, chronic payment arrears owed to electricity generation companies, which have constrained investment, weakened liquidity and threatened the financial viability of the Nigerian Electricity Supply Industry (NESI).

NBET said the first coupon and principal repayment on the Series 1 bond, which fell due on July 14, 2026, was settled in full and on schedule, demonstrating the government’s commitment to honouring its obligations and strengthening investor confidence ahead of the second issuance.

The upcoming Series 2 bond, valued at about N729 billion, alongside the earlier N501 billion Series 1 issuance, represents the first phase of a broader capital market programme intended to mobilise N4 trillion to resolve verified legacy liabilities in the electricity market.

According to NBET, the initiative is expected to improve liquidity across the electricity value chain, strengthen the financial position of market participants and create a more bankable environment capable of attracting long-term private investment into power generation.

Johnson Akinnawo, managing director and chief executive officer of NBET, described the planned issuance as another milestone in the government’s efforts to stabilise the electricity market.

“The second issuance demonstrates the Federal Government’s commitment to resolving verified legacy obligations through a transparent, structured and market-based mechanism,” Akinnawo said.

“By improving liquidity across the electricity value chain, the programme will help strengthen the financial position of market participants, support new investment and promote sustainable electricity generation for the benefit of Nigerians.”

He recalled that the Federal Executive Council (FEC) approved the establishment of the N4 trillion Presidential Power Sector Debt Reduction Programme in 2025, with NBET appointed as the sponsoring institution responsible for settling verified legacy debts owed within the electricity sector.

Akinnawo explained that the programme would be implemented through multiple debt issuances by NBET Finance Company Plc, a special purpose vehicle established specifically to execute the programme.

According to him, the debt instruments are backed by the full faith and credit of the Federal Government and supported by a comprehensive package of risk mitigation measures designed to ensure successful execution and reassure investors.

“The programme has the full backing of the Federal Government and incorporates a robust suite of instruments designed to mitigate transaction risks and support successful execution,” he said.

He added that the second bond issuance would represent a decisive step towards resolving financial obligations that have burdened the electricity market for years.

“The issuance of the approximately N729 billion second bond would represent a decisive step towards resolving longstanding financial obligations and establishing a more stable, bankable and investment-friendly electricity market capable of supporting Nigeria’s economic growth,” Akinnawo said.

Nigeria’s power sector has struggled with liquidity challenges for over a decade as tariff shortfalls, subsidy obligations and payment defaults accumulated across the electricity value chain.

The mounting debts have constrained GenCos’ ability to invest in maintenance and expansion, weakened gas supply to power plants and undermined confidence among investors and lenders.