The Federal Government has taken a major step toward resolving the long-standing liquidity crisis plaguing Nigeria’s power sector with the launch of a N590bn Series 1 bond programme aimed at clearing historic debts owed to power generation companies (GenCos).
According to a term sheet for the transaction, the programme is split into Tranche A, which involves N300bn offered to investors for cash subscriptions, and Tranche B, under which N290bn will be allotted directly to GenCos on the same terms. The issuance window runs between November and December.
The bond carries a seven-year tenor, a fixed coupon rate, and semi-annual interest payments, and will be amortised over the duration of its lifespan.
The arrangement represents one of the most significant interventions by President Bola Tinubu’s administration to stabilise the electricity market, which analysts have repeatedly described as being on the brink due to worsening liquidity pressures
The debt instrument will be listed on both the Nigerian Exchange and FMDQ Securities Exchange, and qualifies under the Trustee Investment Act, making it eligible for investment by pension fund administrators, asset managers, insurers, banks, and high-net-worth investors.
The term sheet further revealed that the Federal Government has the discretion to absorb oversubscription of up to N1.23tn, creating additional room for non-cash bond allocations to GenCos if required.
“Pricing will be based on the seven-year FGN bond yield plus a spread and will be conducted through a book-build process. The minimum subscription is N5m, representing 5,000 units at N1,000 each,” the document stated.
Proceeds from the offer, fully backed by the Federal Government and recognised by the Central Bank for liquidity purposes, will be used to clear outstanding obligations to GenCos.
Nigeria’s power sector has for years struggled under the weight of chronic under-remittance by electricity distribution companies (DisCos), which has prevented the Nigerian Bulk Electricity Trading Company (NBET) from paying GenCos for power supplied to the national grid.
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GenCos say debts now stand at about N4tn, with projections that they could reach N6tn by year-end.
This financial strain has weakened gas supply agreements, forced power plants to operate below capacity, and contributed to frequent grid collapses and unstable electricity supply nationwide.
The bond is guaranteed by the full faith and credit of the Federal Government. Repayment will be primarily funded through national budget provisions, with NBET’s collections from DisCos serving as an additional recovery source.
The government says the intervention is designed to stabilise the generation segment of the power value chain, restore confidence among private operators, and create a pathway for long-term financing of the sector.