FG raises N728.9bn in second bond issuance for power sector debt

The Federal Government (FG) has raised N728.9 billion in bonds as part of its funding process to offset the N4 trillion legacy debt it owed electricity Generation Companies, GENCOs.

Speaking at the bond launch in Abuja, TaiwoOyedele, Minister of Finance and Coordinating Minister of the Economy, said the Series-2 of the bond issuance program comprises N402 billion in cash bonds, while another N326.9 billion was allotted as non-cash bonds to participating GenCos.

The second bond brings the total issuance to N1.23 trillion. “This transaction addresses an important challenge in Nigeria’s electricity market, which is accumulated legacy obligations that have weakened liquidity, constrained investments and affected,” Oyedele stated.

The minister lamented that the outstanding obligations had affected confidence across the electricity value chain, adding that the FG’s objective is to resolve legitimate legacy obligations through a structured and transparent process.

Oyedele said the presidential power sector debt reduction programme must be accompanied by reforms capable of preventing the recurrence of similar debts.

He also advocated for greater efficiency and accountability throughout the electricity ecosystem to strengthen the sustainability of the market.

Akin Odeyemi, chief executive officer (CEO), Nigerian Bulk Electricity Trading (NBET) Plc, said the latest bond issuance raised N728.9 billion, following N501 billion secured through Series-1 in January.

He added that the Series-2, launched in August, involved 11 GenCos, compared with eight companies that participated in the first issuance.

Also speaking, Verheijen, special adviser to President Bola Tinubu on oil and gas, said the agreements represent 21 power plants, adding that series 2 would deepen the implementation of the debt reduction programme.

“It should also be viewed as part of a broader effort to restore financial confidence, liquidity and sustainability to the Nigerian Electricity Supply Industry,” he said.

On his part, Joseph Tegbe, Minister of Power, said the bond issuance demonstrated the federal government’s commitment to addressing structural challenges confronting the electricity industry.