FG Signs N729bn Series-2 Bond Agreement With GenCos

The Federal Government has signed a N728.979 billion Series-2 bond agreement under its N4 trillion Power Sector Debt Reduction Programme to settle verified legacy debts owed to electricity generation companies.

The transaction is expected to improve liquidity in the electricity market and strengthen confidence among investors and other stakeholders in the power sector.

The Series-2 bond comprises N402 billion in cash bonds raised through the domestic capital market and N326.979 billion in non-cash bonds allocated to participating generation companies.

The Managing Director and Chief Executive Officer of Nigerian Bulk Electricity Trading Plc, Akinola Odeyemi, described the transaction as a major step towards addressing the longstanding financial challenges affecting the Nigerian Electricity Supply Industry.

He said the programme was designed not only to settle historical obligations but also to restore financial confidence and create conditions for increased investment in electricity generation.

The Series-2 issuance, launched in August, involves 11 generation companies, compared with eight companies that participated in the first series.

Odeyemi said the increased participation demonstrated growing confidence in the Federal Government’s framework for addressing verified outstanding obligations in the sector.

Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, said the transaction represented an important step towards resolving accumulated legacy obligations that had weakened liquidity and constrained investment across the electricity market.

He, however, stressed that the bond programme alone could not solve the sector’s challenges.

Oyedele said improvements were also required in market policies, revenue assurance, reduction of technical and commercial losses, efficiency and accountability across the electricity value chain.

The minister said the transaction demonstrated the ability of the Federal Government to use Nigeria’s domestic capital market to address major economic challenges while mobilising long-term domestic capital.

He warned that the success of the programme should not be measured solely by the volume of bonds issued.

The Senior Special Adviser to the President on Energy, Olu Verheijen, who was represented at the ceremony by Iriye Onaguruwa, described the Series-2 issuance as a major expansion of the Presidential Power Sector Financial Reform Programme.

The Federal Government expects the debt reduction programme to strengthen the financial position of the electricity market and create a more sustainable environment for investment in generation and other areas of the power sector.