The Federal Government has announced the issuance of a second bond worth approximately N729 billion to settle verified legacy debts owed to electricity generation companies across Nigeria, as part of the Presidential Power Sector Debt Reduction Programme established to address one of the most persistent structural failures in the country’s electricity market.
The issuance follows a successful Investors’ Forum held today at the Transcorp Hilton in Abuja, attended by institutional investors, capital market participants, and government officials, and brings the total value of the first two bond issuances under the programme to approximately N1.23 trillion.
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The debt problem the bond is addressing
Nigeria’s power sector carries a legacy debt burden estimated at N6.8 trillion owed to electricity generation companies by the Nigerian Bulk Electricity Trading Plc, which purchases power from generators and sells it to distribution companies. These debts have accumulated over many years during which the tariffs charged to consumers were insufficient to cover the actual cost of power generation, creating a structural cash flow gap that left GenCos underpaid, underinvested, and increasingly unable to maintain or expand generation capacity.
President Tinubu approved the N4 trillion Presidential Power Sector Debt Reduction Programme in 2025, with NBET designated as the sponsoring institution and NBET Finance Company Plc, a special purpose vehicle, established to issue the debt instruments. The instruments carry the full faith and credit of the Federal Government and are backed by a comprehensive package of risk mitigation measures designed to ensure successful execution and investor confidence in the programme.
The Series 1 bond of N501 billion was issued in January 2026. The first coupon and principal repayment on that bond fell due on 14 July 2026 and was settled promptly and in full — a milestone that NBET Chief Executive Johnson Akinnawo said demonstrated the government’s commitment to meeting its financial obligations and provided meaningful reassurance to prospective investors in the Series 2 issuance.
Paying the first coupon on time is not a small thing in Nigeria’s infrastructure bond market. It is the data point that separates a programme that says the right things from one that actually performs — and it has arrived at exactly the right moment to support the Series 2 issuance.
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Why this matters for Nigerian businesses
The connection between GenCo debt and the daily cost of doing business in Nigeria runs directly through the electricity grid. Generation companies that are owed billions by the system reduce output, defer maintenance, and limit capacity investment — all of which reduce the total power available to the grid and intensify the pressure on businesses to run expensive generators as a substitute.
Nigerian SMEs currently spend over 40 per cent of profits on electricity generation in many cases, with diesel costs at approximately N1,700 per litre representing one of the most punishing recurring expenses in the operating budget of a small manufacturer, processor, or retailer. Every percentage point improvement in grid reliability reduces the hours businesses spend on generators and the litres of diesel they burn to stay operational.
Akinnawo described the bond programme as creating a more stable, bankable, and investment-friendly electricity market capable of supporting Nigeria’s economic growth — language that points beyond the immediate debt settlement to the longer-term goal of attracting the private investment in generation capacity that the sector has needed for years.
Settling verified debts clears a blockage. It does not, by itself, build new generation capacity or fix the transmission constraints that limit how much power can reach businesses even when it is generated. The bond is a necessary first step, not a complete solution — and the sector will need both to deliver meaningful relief to businesses on the ground.
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What comes next
The N1.23 trillion covered by the first two issuances represents only the first phase of the N4 trillion programme. Subsequent phases will be required to address the remaining verified obligations across the electricity supply industry. The Association of Power Generation Companies has noted concerns about being excluded from the design of the bond programme and about terms being imposed on member firms — a tension that the government will need to manage carefully if the programme is to achieve its full intended impact on sector liquidity and investor confidence.
