N4trn Legacy GenCo Debt: Federal Govt Concludes Phase 1 Bond Series With N729bn Issuance

The federal government has concluded Phase 1 of its N4 trillion Power Sector Multi-Instrument Issuance Programme, raising a combined N1.23 trillion across two bond series to settle legacy debts owed to electricity generation companies and inject fresh liquidity into Nigeria’s electricity market.

The final leg of Phase 1, the Series 2 Power Sector Bond, raised N728.979 billion, bringing the total raised since the programme’s Series 1 issuance in January 2026 to N1.23 trillion, matching the Phase 1 target.

The bond, issued by Nigerian Bulk Electricity Trading Plc (NBET) Finance Company Plc, comprises N402 billion in cash bonds raised from the capital market and N326.979 billion in non-cash bonds approved for GenCos participating in the Presidential Power Sector Debt Reduction Programme. It follows the Series 1 issuance, which closed in January 2026 for N501 billion.

Speaking at the signing ceremony in Abuja, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, described the completion of Phase 1 as an important step towards delivering more reliable electricity to Nigerian households and businesses. He commended the GenCos, investors, advisers and regulators involved in the transaction, and said attention must now turn to disciplined implementation of the reforms that follow.

Our task from here is to ensure discipline in implementation and sustain the broader reforms required to build an electricity market capable of supporting Nigeria’s growth and industrialisation,” he said.

Oyedele commended the participating generating companies, investors, advisers, regulators and other institutions involved in the transaction, saying that the focus must now shift to disciplined implementation and sustained reforms.

“Our task from here is to ensure discipline in implementation and sustain the broader reforms required to build an electricity market capable of supporting Nigeria’s growth and industrialisation,” Oyedele said.

The President on Power, Rilwan Lanre Babalola, warned that settling the electricity sector’s legacy debts will not, on its own, resolve Nigeria’s power challenges, stressing that government must also tackle the underlying causes of new debt accumulation.

Babalola said the factors responsible for the build-up of more debt, including poor payment discipline, weak revenue collection and technical, commercial and collection losses across the value chain, must be addressed alongside the clearance of existing obligations.

“But we must recognise that debt resolution, by itself, is not enough. As we address the stock of legacy debt, we must also tackle the causes of new debt accumulation,” he said.

The representative of the special adviser to the President on Oil and Gas, Olu Verheijen, said the transaction reflected growing investor confidence in the federal government’s electricity sector reforms.

She said the programme was designed to move the sector “from shortage, to settlement, to surplus,” describing it as a response to a liquidity crisis that had constrained the entire electricity value chain.

“What we are doing is moving from shortage, to settlement, to surplus. A situation once marked by a shortage of liquidity and electricity is being addressed through an ambitious settlement programme, enabling first a surplus of fresh investment and, ultimately, a surplus of electricity supply,” Arowolo said.

She added that Nigerian households, offices and industries would be the ultimate beneficiaries as the bond programme progressed alongside other reforms, including the Presidential Metering Initiative.

The group managing director and chief executive officer of CardinalStone Partners, Michael Nzewi, said the Series 2 transaction was the largest bond issuance in the history of the Nigerian capital market. He said the N4 trillion programme, with a Phase One target of N1.23 trillion, was structured to provide a scalable and sustainable framework for addressing legacy obligations in the power sector while laying the foundation for future growth.

“The success of Series One led us to even better structuring on this set of issuance. This Series Two, which we are signing today, raised a total of N729 billion,” Nzewi said.

Despite the scale of the fundraising, Babalola’s caution set the tone for the ceremony, underscoring that without stronger payment discipline and improved collections across the sector, the debt currently being cleared could resurface in the future.