• Oyedele says debt settlement must be backed by reforms, market discipline
•NBET: It’s a milestone in efforts to address longstanding financial challenges
•Two issuances raise combined N1.23 trillion within nine months
Emmanuel Addeh in Abuja
The federal government yesterday officially signed the financing documents for the N728.9 billion Series 2 power sector bond, marking the completion of the transaction designed to settle part of its N4 trillion outstanding obligations to the electricity market.
The signing ceremony held in Abuja formalised the financing arrangement after approval had already been secured for the Series 2 Tranche B of the bond, following the earlier issuance of the Series 2 Tranche A.
The development brings the combined value of the two power-sector bond issuances to N1.23 trillion within nine months, underscoring the federal government’s ongoing effort to address legacy debts and restore financial stability to the electricity market.
Speaking at the event, the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, stressed that debt settlement alone would not resolve the underlying problems in the power sector, insisting that the financing intervention must be backed by reforms that would improve the market’s sustainability.
According to him, the N728.9 billion power sector bond must be accompanied by stronger market discipline and structural reforms to prevent a recurrence of the legacy debts that have weakened Nigeria’s electricity market.
Oyedele said the transaction comprised N402 billion in cash bonds raised from the capital market and N326.9 billion in non-cash bonds allotted to participating Generation Companies (Gencos) under the Presidential Power Sector Debt Reduction Programme (PPSDRP).
He said the transaction addressed accumulated legacy obligations that had weakened liquidity, constrained investment and affected confidence across the electricity value chain.
However, the minister stressed that settling the debts would not be sufficient to resolve the sector’s challenges without reforms to address the factors responsible for fresh debt accumulation.
“This means the bond programme cannot stand alone. It must be accompanied by stronger market discipline, improved revenue assurance, reduction in technical and commercial losses, greater efficiency and accountability across the electricity ecosystem,” Oyedele said.
He said the federal government’s objective was to resolve legitimate legacy obligations in a structured and transparent manner while implementing reforms necessary to prevent their recurrence.
“It is important that we are leveraging Nigeria’s domestic capital markets,” he said, adding that the transaction demonstrated how the government could use appropriate market instruments to address significant economic challenges while deepening the financial markets and mobilising long-term domestic capital.
Oyedele said the ultimate measure of the programme would not be the size of the bonds issued but whether it delivered a financially sustainable electricity market.
“Ultimately, the success of this programme will not be measured by the amount or size of bond that we have issued. It will be measured by whether we achieve a financially sustainable electricity market that can attract investments, meet its obligations and deliver more reliable power to Nigerian households and businesses,” he said.
Earlier in his opening remarks, the Chief Executive Officer of Nigerian Bulk Electricity Trading Plc (NBET), Akin Odeyemi, described the Series 2 issuance as another important milestone in the federal government’s efforts to address longstanding financial challenges confronting the electricity supply industry.
Odeyemi said the issue would be implemented in two tranches, with 11 generation companies participating, compared with eight under Series 1.
He said the increased participation reflected growing confidence in the programme and its ability to provide a credible framework for addressing verified outstanding obligations to generation companies.
According to him, accumulated obligations had affected the ability of market participants to meet their commitments and constrained the capacity of generation companies to invest in additional generation capacity.
Odeyemi said the programme should therefore be viewed beyond the settlement of historical debts. “The financial challenges to the power sector have had implications across the electricity value chain,” he said.
He added that the programme was “not simply an initiative for settling historical debt, but also as part of efforts to restore financial confidence, liquidity and sustainability to the Nigerian electricity supply industry.”
Delivering an overview of the project, the Managing Director of CardinalStone Partners, Michael Nwezi, said the completion of the first phase of the N4 trillion programme was significant not only for the power sector but also for the development of Nigeria’s capital markets.
Nwezi said the programme’s first phase was valued at N1.23 trillion and structured into two issuances: Series 1, which closed at N501 billion in January 2026, and Series 2, which raised N729 billion. He said the two issuances had raised a combined N1.23 trillion within nine months.
According to him, Series 1 served as an important test of the programme and demonstrated that the market was willing to support a well-structured instrument despite the complexities surrounding the power sector.
“The success of the Series 1 led us to an even better outing on this second issuance. This Series 2, which we are signing today, raised a total of N729 billion,” Nwezi said.
He described the Series 2 transaction as the largest fund issuance in the history of the Nigerian capital market, saying it attracted participation from pension fund administrators, banks, sovereign wealth funds, asset managers and other institutional and retail investors.
Nwezi said the strong investor response demonstrated confidence in the structure, repayment framework and economic potential of the programme.
“The investor engagement process itself also reinforced an important point that capital is available and investors are willing to finance truly transformational projects when they have sufficient visibility, transparency, and confidence around the offering,” he said.
He said the completion of Series 2 marked the conclusion of the first phase of the programme, with work expected to begin soon on the second phase. “This completes phase one, and the work will be starting on phase two very soon,” he said.
Also speaking, Special Adviser to the President on Power, Dr. Lanre Babalola, said the issuance represented an important step in restoring commercial stability to Nigeria’s electricity sector.
Babalola said the electricity market had for years carried substantial legacy obligations that weakened market participants, constrained investments and undermined confidence across the value chain. He, however, warned that debt resolution alone could not constitute sector reform.
“The federal government recognises that we cannot build the electricity market of the future while continuing to carry unresolved obligations from the past. But we must equally recognise that debt resolution by itself is not sector reform,” Babalola said.
He said the government must address the causes of new debt accumulation through improved payment and revenue collection, reduction in technical, commercial and collection losses, accelerated metering and tariffs that increasingly reflect efficient costs while protecting consumers.
“The objective is ultimately a power sector that can pay its bills, attract investment, and expand reliable electricity supply without requiring government financial intervention,” he said.
On his part, the Director-General of the Bureau of Public Enterprises (BPE), Ayodeji Gbeleyi, said the Series 2 issuance represented another significant step towards addressing verified legacy obligations owed to generation companies, restoring liquidity and boosting investor confidence.
Gbeleyi said the successful payment of the first principal component of the Series 1 bond, which fell due in July 2026, was another important milestone demonstrating the federal government’s commitment to meeting its obligations under the programme.
He said the objective of the intervention was not simply to settle old debts but to create the financial conditions for a healthier electricity market.
Gbeleyi said complementary interventions were also being pursued in the distribution segment to improve metering, revenue assurance, network performance and reduce aggregate technical, commercial and collection losses.
Representing the Gencos, Sahara Group Chief Executive Officer, Kola Adesina, described the intervention as a significant confidence-building measure.
Adesina said the government was not merely settling historical debts but restoring liquidity and rebuilding investor confidence across the electricity value chain, from gas supply and generation to transmission and distribution. “The industry must now respond with performance,” Adesina said.
He added: “Improved liquidity must translate into greater generation availability, stronger networks, reduced losses, improved collections, increased investment, and ultimately more reliable electricity for Nigerian homes and businesses.”
Adesina said government intervention could not replace commercial discipline, stressing that the sustainable future of the sector must be based on accountability, cost-reflective economics, sanctity of contracts and a market where every participant meets its obligations.