The Federal Government has launched a N729 billion power sector bond as part of the second phase of its Presidential Power Sector Debt Reduction Programme, marking another major step toward resolving long-standing financial challenges in Nigeria’s electricity industry. The bond, unveiled by the Nigerian Bulk Electricity Trading (NBET) Plc during an investors’ forum in Abuja, is designed to settle verified legacy debts owed to electricity generation companies (GenCos), while ensuring timely payments to gas suppliers and other key service providers. The initiative is expected to improve liquidity across the power sector and create a stronger foundation for sustainable electricity supply.
The latest bond follows the successful rollout of the programme’s first phase in February 2026, when the Federal Government deployed approximately N501 billion, made up of N300 billion in cash and N201 billion in non-cash bond instruments, to offset part of the outstanding obligations owed to GenCos. The debt reduction programme is aimed at restoring commercial stability within Nigeria’s electricity market, improving investor confidence, and attracting fresh investments needed to strengthen the country’s power infrastructure.
Speaking at the event, government officials stressed that fulfilling financial commitments is critical to rebuilding trust in the sector. Special Adviser to the President on Oil and Gas, Olu Verheijen, said the successful implementation of the first phase demonstrated the government’s determination to honour its obligations, adding that investors place greater value on consistent execution than promises. Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, echoed the sentiment, noting that every fulfilled commitment helps reduce future borrowing costs. Meanwhile, Power Minister Joseph Tegbe described the debt reduction initiative as a strategic economic reform that will pave the way for a financially sustainable, investment-driven electricity market capable of powering Nigeria’s industrial growth.
Investor participation in the first bond issuance reflected strong market confidence, according to CardinalStone’s Head of Investment Banking, Onyebuchim Obiyemi. She disclosed that pension fund administrators contributed about N150 billion, while commercial banks accounted for roughly 41.5 percent of the cash raised. Asset managers also participated significantly, and efforts are now underway to attract insurance companies, family offices, and other institutional investors into the second bond series. The first seven-year bond was priced at 17.5 percent, with the government successfully making its first coupon payment of approximately N63.5 billion in July 2026.
The debt reduction programme is part of a broader N4 trillion Power Sector Debt Reduction Initiative approved by the Federal Executive Council after a comprehensive verification exercise reduced verified liabilities from over N4 trillion to approximately N3.3 trillion. So far, N333 billion has been paid to eight participating GenCos covering 17 power plants. According to the Federal Government, the new bond issuance will complete the first phase of the settlement programme, improve electricity reliability for businesses and households, strengthen public finances, and reinforce confidence in Nigeria’s power sector as it transitions toward a more financially sustainable and investment-friendly future.
source: nairametrics
