Capital Market Confidence: Nigeria’s ₦501 Billion Energy Bond Fully Subscribed
The Federal Government of Nigeria has achieved a 100% subscription rate for its inaugural N501 billion power sector bond, a key component of the Presidential Power Sector Debt Reduction Programme (PPSDRP). Disclosed on Tuesday by Mrs. Olu Arowolo Verheijen, Special Adviser to the President on Energy, the successful issuance signals robust investor confidence in the structural reforms aimed at stabilizing the Nigerian Electricity Supply Industry (NESI).
The Series 1 Power Sector Bond, facilitated by NBET Finance Company Plc, comprises N300 billion raised directly from capital markets and N201 billion in bonds allotted to participating Generation Companies (GenCos). This financial instrument is designed to settle verified receivables for electricity supplied between February 2015 and March 2025, addressing the liquidity crisis that has long hampered the sector’s operational efficiency.
Liquidity Resolution and Investor Confidence
The primary objective of the PPSDRP is the resolution of legacy debts owed to GenCos and gas suppliers. By clearing these arrears, the government aims to strengthen the balance sheets of power producers, enabling them to meet their own debt and operational obligations.
Mr. Kola Adesina, Group Managing Director of Sahara Power Group, noted that the successful capital formation is a direct result of visible "lines of sight" for recovering previous investments. He further indicated that the resolution of these debts would trigger immediate expansion projects, such as the second phase of the Egbin Power Plant.
Framework of the Settlement
The settlement involves negotiated agreements with five major generation companies: First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and Niger Delta Power Holding Company Limited. These entities have entered into agreements with the Nigerian Bulk Electricity Trading (NBET) Plc for a total negotiated settlement of N827.16 billion.
The N501 billion raised from the Series 1 bond will fund the first and second installments of this settlement, covering approximately 50% of the total agreed amount. These payments will be executed through a combination of cash and notes to provide immediate liquidity to the power providers.
Broader Economic and Sectoral Impact
The reforms are projected to impact 4,483.60 megawatt-hours per hour of generation capacity, finalizing settlements for 290,644.84 gigawatt-hours of electricity billed over the past decade. The initiative supports a network serving approximately 12.03 million registered electricity customers nationwide.
While the government plans to issue up to N4 trillion in government-backed bonds to fully resolve industry debts, the strategy has met with some caution regarding the long-term debt-for-debt implications. However, official positions maintain that the use of transparent capital market financing and validated claims is essential for restoring fiscal discipline and unlocking future investments in Nigeria's energy infrastructure.
