The Federal Government has started the process of repaying the N4tn debt owed to Power Generation Companies with the launch of a N590bn first-tranche bond issuance. This first tranche is part of the wider N4tn NBET Finance Company Plc Bond Programme and is fully guaranteed by the Federal Government. It includes N300bn in cash bonds that will be issued to the market and N290bn in non-cash bonds that will be allotted directly to GenCos on identical terms. According to details in the bond term sheet obtained on Tuesday, the Series 1 bond will be issued between November and December 2025, marking a significant step in addressing long-standing financial challenges in the power sector.
CardinalStone Partners Limited is serving as the lead issuing house and financial adviser. The term sheet explained that “Series 1 Tranche A involves N300bn issued to the market for cash, while N290bn under Tranche B is allotted to the GenCos on identical terms. The bond will be issued between November and December, with a seven-year tenor on a fixed-rate coupon, redeemed on an amortising basis and paid semi-annually in arrears.” This structure aims to ensure steady repayment while supporting investor confidence in the programme.
The issuance is seen as one of the most decisive moves by President Bola Tinubu’s administration to confront what experts call one of the most crippling financial crises in Nigeria’s power sector. The Series 1 bond carries a seven-year tenor, a fixed coupon rate and semi-annual interest payments, and will be amortised across its lifespan. It will also be listed on both the Nigerian Exchange and the FMDQ Securities Exchange. By qualifying under the Trustee Investment Act, the instrument becomes eligible for investment by pension fund administrators, banks, asset managers, insurance firms and high-net-worth investors.
The issuer retains the discretion to absorb oversubscription of up to N1.23tn, which creates room for additional non-cash bond allocations to GenCos if needed. The term sheet added that “pricing will be based on the yield of the seven-year FGN bond plus a spread, and the issuance will be conducted through a book-build process. The minimum subscription is N5m, representing 5,000 units at N1,000 each, with additional subscriptions in multiples of N1,000. Proceeds from the issuance will be used to settle outstanding liabilities owed to GenCos. The instrument is guaranteed by the full faith and credit of the Federal Government, enjoys CBN liquidity status, meets PenCom compliance requirements, qualifies under the Trustee Investment Act, and will be listed on both the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange.”
It further noted that “oversubscription may be absorbed at the discretion of the issuer up to a maximum of N1,230,000,000,000 approved for Phase 1 of this transaction. The issuer reserves the right to increase the size of the non-cash bonds to be issued to the GenCos under any Series or accommodate additional allotments as may be required.”
For years, Nigeria’s power sector has struggled under the weight of NBET’s inability to fully pay GenCos due to chronic under-remittance by electricity distribution companies. GenCos have warned repeatedly that the growing debt, estimated at N4tn and projected to hit N6tn by year-end, has crippled operations, weakened gas supply contracts and pushed several plants to run below capacity. This liquidity gap has contributed to frequent grid collapses, low power generation and unstable electricity supply across the country.
The bond is fully guaranteed by the Federal Government, enjoys Central Bank liquidity status and meets PenCom requirements. Repayment will be funded mainly through the national budget, while NBET’s recoveries from DisCos will serve as a secondary source.
