The Federal Government has launched the first tranche of a ₦4 trillion Power Sector Debt Reduction Programme, signalling renewed commitment to restoring liquidity, investor confidence and operational stability in the electricity market.
The debut issuance, a ₦590 billion Series 1 Power Sector Bond, is being issued by NBET Finance Company PLC, a special purpose vehicle sponsored by the Nigerian Bulk Electricity Trading (NBET) Plc, with the full faith and credit guarantee of the Federal Government of Nigeria. The offer, arranged by FSDH Capital Limited as Joint Issuing House, opened on 19 December 2025 and is scheduled to close on 30 December 2025.
The bond issuance forms the first concrete execution of the Presidential Power Sector Debt Reduction Programme (PPSDRP), established by President Bola Ahmed Tinubu, GCFR, to address the mounting “legacy debt” owed by NBET to electricity Generation Companies (GenCos). These unpaid obligations, accumulated between February 2015 and March 2025, have weighed heavily on sector liquidity and constrained investment across the power value chain.
To drive the initiative, the President constituted the Presidential Power Sector Debt Reduction Committee under the leadership of the Honourable Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, OFR. Acting on the Committee’s recommendations, the Federal Executive Council approved the ₦4 trillion programme as a structured, transparent and market-aligned mechanism to fully resolve verified GenCo receivables.
According to programme details, the debt resolution strategy rests on three pillars: the establishment of the ₦4 trillion debt programme to settle verified unpaid invoices; the execution of settlement agreements with negotiated discounts on legacy obligations; and a centralized framework designed to prevent future debt accumulation within the sector.
The Series 1 issuance comprises two tranches: a ₦300 billion Tranche A issued as cash bonds via book-build, and a ₦290 billion Tranche B structured as non-cash bonds through private placement, primarily for GenCos. Both tranches carry identical terms, including a seven-year tenor, fixed semi-annual coupons priced within a 16.75 to 17.00 per cent range, and an amortising repayment structure.
Crucially, the bond enjoys multiple enhancements aimed at broadening investor appeal. It is guaranteed by the Federal Government, classified as a liquid asset by the Central Bank of Nigeria, eligible for pension fund investment with PenCom confirmation, and backed by a tax exemption approval from the Honourable Minister of Finance. The instrument will also be listed on the Nigerian Exchange Limited and/or FMDQ Securities Exchange.
Proceeds from the issuance will be applied directly to settling outstanding NBET liabilities to GenCos, a move expected to significantly improve cash flows, strengthen generation capacity and stabilise electricity supply nationwide.
Market observers see the transaction as one of the most consequential power-sector interventions in recent years, not only for its size but for its signalling effect. By moving decisively to clear legacy debts through a transparent capital-market solution, the government is positioning the sector for renewed private investment and long-term sustainability.
With an indicative settlement date of 8 January 2026, attention now turns to subscription levels and pricing outcomes, which will set the tone for subsequent tranches under the ₦4 trillion programme—arguably one of the most ambitious fiscal and sectoral reform initiatives of the Tinubu administration so far.
