FG raises N1.23trn to tackle N4trn GenCos’ legacy debt

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The Federal Government has raised about N1.23 trillion through two bond issuances to tackle N4 trillion legacy debt owed to electricity Generation Companies (GenCos).

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Mr Akin Odeyemi, Chief Executive Officer, Nigerian Bulk Electricity Trading Plc (NBET), disclosed this during the ceremony in Abuja on Monday.

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Odeyemi said the latest Series 2 issuance raised N728.9 billion, following N501 billion secured through Series 1 in January.

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He said Series 2, launched in August, involved 11 GenCos, compared with eight companies that participated in the first issuance.

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According to him, the increased participation reflects growing stakeholder confidence in the debt reduction programme.

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“The increased participation is a positive development and reflects the growing confidence of stakeholders in the programme,” Odeyemi said.

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He said the participation also demonstrated the programme’s ability to provide a credible framework for addressing verified outstanding obligations.

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Odeyemi said the N728.9 billion Series 2 bond would be implemented in two tranches, identified as Tranches A and B.

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He said accumulated outstanding obligations had affected the ability of electricity market participants to meet their financial commitments.

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The NBET chief executive said the debt burden had also constrained GenCos’ capacity to invest further in electricity generation.

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“It is therefore important that the Debt Reduction Programme is viewed not simply as an initiative for settling historical debt,” he said.

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Odeyemi said the programme should instead be viewed as part of broader efforts to restore financial confidence, liquidity and sustainability.

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“It should also be viewed as part of a broader effort to restore financial confidence, liquidity and sustainability to the Nigerian Electricity Supply Industry,” he said.

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Mr Taiwo Oyedele, Minister of Finance and Coordinating Minister of the Economy, said Series 2 comprised N402 billion in cash bonds.

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Oyedele said another N326.9 billion was allotted as non-cash bonds to participating GenCos under the Presidential Power Sector Debt Reduction Programme.

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He said the transaction addressed accumulated legacy obligations that had weakened liquidity and constrained investment across the electricity market.

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“This transaction addresses an important challenge in Nigeria’s electricity market, which is accumulated legacy obligations,” Oyedele said.

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According to him, the obligations had also affected confidence across the electricity value chain.

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Oyedele said the Federal Government’s objective was to resolve legitimate legacy obligations through a structured and transparent process.

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He stressed that the bond programme must be accompanied by reforms capable of preventing the recurrence of similar debts.

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“This means that the bond programme cannot stand alone,” Oyedele said.

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He called for stronger market discipline, improved revenue assurance and reductions in technical and commercial losses across the electricity sector.

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Oyedele also advocated greater efficiency and accountability throughout the electricity ecosystem to strengthen the sustainability of the market.

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“It is also important that we are leveraging Nigeria’s domestic capital markets,” he said.

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The Minister of Power, Mr Joseph Tegbe, said the bond issuance demonstrated the Federal Government’s commitment to addressing structural challenges confronting the electricity industry.

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Tegbe, represented by the ministry’s Permanent Secretary, Mr Mahmuda Mamman, said the initiative formed part of efforts to create stable electricity supply.

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He said the programme would also lay the foundation for sustainable development by strengthening the financial position of the electricity sector.

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Mrs Olu Verheijen, Special Adviser to President Bola Tinubu on Oil and Gas, said Series 1 produced settlement agreements with 11 GenCos.

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Verheijen said the agreements represented 21 power plants, adding that Series 2 would deepen implementation of the debt reduction programme.

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“Now we are moving deeper into implementation with Series 2,” she said.

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She said Series 1 had demonstrated the viability of the model, while Series 2 was intended to scale its implementation.

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“As I said at the investor forum in July, Series 1 proved the model and Series 2 is scaling it,” Verheijen said.

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Verheijen stressed that expanding the programme was crucial to delivering meaningful impact across Nigeria’s electricity industry.

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“As important as it is, you would agree that scaling is what truly makes the difference,” she said.

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(NAN)

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