The Federal Government has officially begun tackling the long-standing N4tn debt owed to power generation companies (GenCos) with the rollout of a N590bn first-tranche bond issuance. The move marks the clearest signal yet from President Bola Tinubu’s administration that it is ready to confront the liquidity crisis crippling the electricity market. According to documents reviewed by The PUNCH, the issuance is part of a broader N4tn NBET Finance Company Plc Bond Programme aimed at clearing accumulated obligations that have strained the power sector for years.
The Series 1 bond includes N300bn in cash bonds that will be issued to the open market and N290bn in non-cash bonds allocated directly to GenCos on the same terms. Scheduled for issuance between November and December 2025, the bond carries a seven-year tenor, a fixed annual coupon, and semi-annual interest payments. CardinalStone Partners Limited serves as the lead issuing house and financial adviser, overseeing what analysts consider one of the most significant debt-recovery interventions in Nigeria’s electricity industry.
Beyond its size, the bond stands out for its strong investor protections. Backed by the full faith and credit of the Federal Government, it qualifies under the Trustee Investment Act and will be listed on both the Nigerian Exchange and the FMDQ Securities Exchange. The issuance also allows for oversubscription of up to N1.23tn, a window that could increase non-cash bond allocations to GenCos if necessary. CardinalStone said the pricing will track the yield of the seven-year Federal Government bond plus an additional spread, with a minimum subscription of N5m.
The debt settlement effort comes amid worsening liquidity pressures in the power sector, largely driven by chronic under-remittances from electricity distribution companies (DisCos). GenCos say the accumulated debt—now estimated at N4tn and projected to hit N6tn by year-end—has weakened gas supply contracts, reduced generation capacity, and contributed to repeated national grid collapses. Repayment of the bond will draw primarily from the national budget, with recoveries from DisCos serving as a secondary revenue source.
Ahead of the issuance, CardinalStone has invited banks, pension fund administrators, insurance firms, and other institutional investors to a virtual forum led by the Presidential Power Sector Debt Reduction Committee. The meeting is expected to clarify the structure of the N1.23tn bond issuance planned under the Power Sector Multi-Instrument Issuance Programme. However, some sector insiders say the initiative still raises “more questions than answers,” as stakeholders seek clarity on how the debt repayment plan will reshape the country’s fragile electricity supply chain.
source: punch