NBET Finance Company targets N590bn from bond issuance for power sector legacy debt

NBET Finance Company Plc (the Issuer) is currently in the market for N590 billion Series 1 Power Sector Bond issuance.

The Issuer, NBET Finance Company Plc is a Special Purpose Vehicle (SPV) sponsored by the Nigerian Bulk Electricity Trading (NBET) Plc, an agency of the Federal Government of Nigeria, and guaranteed by the full faith and credit of the Federal Government of Nigeria to facilitate the issuance under the established Presidential Power Sector Debt Reduction Programme (PPSDRP). The net proceeds from the issuance of the instrument will be primarily used to settle outstanding Legacy Debt due from NBET to the GenCos for the period between February 2015 to March 2025.

The Bond issuance by NBET Finance Company Plc is under its N4 trillion Multi-Instrument Issuance Programme (the Programme). The offer, which is now open is scheduled to close on December 30.

The Bond is Guaranteed by the full faith and credit of the Federal Government of Nigeria, enhanced with PenCom confirmation as eligible instrument for Pension Funds, CBN Liquidity Status and Confirmation of Tax Exemption.

In a bid to reduce the significant debt within the Nigerian power sector, President Bola Ahmed Tinubu established the Presidential Power Sector Debt Reduction Committee (PPSDRC) under the leadership of the Minister of Finance & Coordinating Minister of the Economy, Wale Edun and charged it with the responsibility of developing a comprehensive and fiscally responsible strategy aimed at settling the debt owed to Generation Companies (GenCos) by NBET (Legacy Debt), and to improve the efficiency and overall attractiveness of the power sector in Nigeria. In line with the recommendation of the Committee, the Federal Executive Council (FEC), approved the establishment of a N4 trillion Power Sector Debt Reduction Programme (the Debt Reduction Programme) to settle the Legacy Debt.

The Federal Government, through the Debt Reduction Programme, seeks to implement a structured, transparent and market-aligned debt resolution mechanism that will restore investor confidence, improve sector liquidity and support sustainable electricity generation capacity. The strategy is anchored on three pillars: Establishment of a N4 trillion Power Sector Debt Programme to settle verified unpaid invoices owed to the Generation Companies from February 2015 to March 2025; Execution of Settlement Agreements with agreed discounts on Legacy Debt owed to participating GenCos; and a centralised, coordinated approach to prevent future debt accumulation.

Iheanyi Nwachukwu

Iheanyi Nwachukwu, is a creative content writer with almost two decades journalism experience writing on banking, finance, capital markets, and tax. The multiple awards winning journalist is Assistant Editor, BusinessDay. Iheanyi holds BSc Degree in Economics from Imo State University; Master of Science (MSc) Degree in Management from University of Lagos. Iheanyi has attended several work-related trainings including (i) Advanced Writing and Reporting Skills (Pan African University, Lagos); (ii) News Agency Journalism (Indian Institute of Mass Communication {IIMC}, New Delhi, India); and (iii) Capital Markets Development and Regulations (International Law Institute {ILI} of Georgetown University, Washington DC, USA). Other trainings Iheanyi attended include: Economic/Political Risk Analysis (By Thomson Reuters Foundation); International Financial Journalism (IFJ) (By PMA Media Training, UK); Effective Business Writing Skills (By Phillips Consulting); Reporting on Corporate Governance (By International Finance Corporation (IFC) & Thomson Reuters Foundation UK); etc. In addition, he has participated in high-level economy & markets events in Dubai, South Africa, Morocco, and other African countries like Zambia, Ghana and Gambia.