The Federal Government has commenced the repayment of the N4tn debt owed to Power Generation Companies (GenCos) through the launch of a N590bn first-tranche bond issuance.
The first tranche is part of a broader N4tn NBET Finance Company Plc Bond Programme, fully guaranteed by the Federal Government. It includes N300bn in cash bonds to be issued to the market and N290bn in non-cash bonds to be directly allocated to GenCos under the same terms.
According to the term sheet, Series 1 Tranche A covers N300bn offered to the market for cash, while Tranche B consists of N290bn allotted to GenCos. The bond is scheduled for issuance between November and December, carries a seven-year tenor, features a fixed-rate coupon, and will be redeemed on an amortising basis with semi-annual interest payments.
The bond issuance represents a significant step by the administration of President Bola Tinubu to address what industry analysts have long described as one of the most debilitating financial challenges in Nigeria’s power sector.
The Series 1 bond will be listed on the Nigerian Exchange and FMDQ Securities Exchange, and qualifies under the Trustee Investment Act, making it suitable for investment by pension fund administrators, insurance firms, banks, asset managers, and high-net-worth individuals.
The term sheet further explains that pricing will be determined based on the yield of the seven-year Federal Government bond plus a spread, with issuance conducted through a book-build process. The minimum subscription is N5m, representing 5,000 units at N1,000 per unit, with additional subscriptions in multiples of N1,000. Proceeds will be used to settle outstanding liabilities owed to GenCos.
The bond is backed by the full faith and credit of the Federal Government, enjoys Central Bank liquidity status, meets PenCom investment compliance, and will appear on both the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange.
The document also notes that oversubscription may be absorbed at the issuer’s discretion, up to a maximum of N1.23tn approved for Phase 1. The issuer also reserves the right to increase the size of the non-cash bonds allocated to GenCos or allow additional allotments as required.
Nigeria’s power sector has long struggled with NBET’s inability to meet GenCos’ payment obligations, largely due to chronic under-remittance from electricity distribution companies (DisCos).
GenCos have repeatedly raised concerns that the unpaid balance—estimated at N4tn and projected to reach N6tn by year-end—has severely hindered their operations. The persistent debt has strained gas supply contracts and forced many power plants to operate far below installed capacity.
This liquidity crisis has contributed to recurring grid collapses, reduced power generation, and nationwide instability in electricity supply.
Funding for the bond repayment will come primarily from the national budget, with NBET’s recoveries from DisCos serving as a secondary source.
