The Federal Government has taken a major step toward resolving the crippling debt burden in Nigeria’s power sector with the rollout of a N590bn first-tranche bond aimed at offsetting part of the N4tn owed to electricity Generation Companies (GenCos).
The issuance forms the opening phase of a broader N4tn NBET Finance Company Plc Bond Programme backed by a full Federal Government guarantee. The Series 1 tranche includes N300bn in cash bonds to be floated on the market and N290bn in non-cash bonds to be issued directly to GenCos on matching terms.
Documents obtained by PUNCH Online show that the bonds - set for issuance between November and December 2025 - carry a seven-year tenor with a fixed coupon rate, semi-annual payment structure and amortised redemption. CardinalStone Partners Limited is the lead issuing house and financial adviser.
The bonds will be listed on both the Nigerian Exchange and the FMDQ Securities Exchange, and qualify under the Trustee Investment Act, making them suitable for pension funds, banks, insurers, asset managers and other institutional investors.
According to the term sheet, pricing will be determined through a book-build process, benchmarked against the yield on seven-year Federal Government bonds plus a spread. Minimum subscription is pegged at N5m (5,000 units at N1,000 each).
The issuer also has room to absorb up to N1.23tn in oversubscription - paving the way for additional non-cash bond allocations to GenCos under subsequent series.
The bond programme is widely viewed as the Tinubu administration’s most decisive move yet to stabilise the power sector’s liquidity framework. NBET’s failure to pay GenCos due to persistent under-remittance by Distribution Companies (DisCos) has left a debt pile of about N4tn, projected to reach N6tn by year-end.
GenCos have repeatedly warned that the mounting debt has eroded their capacity, disrupted gas supply contracts, and forced power plants to operate far below optimal generation levels - contributing to recurring grid collapses and epileptic electricity supply nationwide.
The Series 1 bond enjoys full Federal Government backing, Central Bank liquidity status, and complies with PenCom investment guidelines. Repayment will be sourced mainly from the national budget, with NBET’s recoveries from DisCos serving as supplementary funding.
According to officials, proceeds from the bond will be dedicated to clearing GenCos’ outstanding invoices, marking a key turning point in efforts to restore financial stability to the electricity value chain.
Leave a Reply