The Federal Government has formally started repaying the ₦4 trillion debt owed to electricity generation companies, launching a ₦590 billion first-tranche bond aimed at stabilising Nigeria’s troubled power sector. The bond issuance marks the opening move in a broader ₦4 trillion repayment programme under President Bola Tinubu’s administration.
The initial bond, issued through NBET Finance Company Plc, is fully guaranteed by the Federal Government. It is split into two parts: ₦300 billion to be raised from the capital market as cash bonds, and ₦290 billion issued directly to power generation companies as non-cash instruments on the same terms.
Details from the bond term sheet show the Series 1 issuance will run between November and December 2025. The instrument carries a seven-year tenor, a fixed interest rate, and semi-annual coupon payments, with gradual amortised repayment over its lifespan. CardinalStone Partners Limited is serving as lead issuing house and financial adviser.
The bond will be listed on both the Nigerian Exchange and the FMDQ Securities Exchange, making it accessible to pension funds, banks, insurers, asset managers, and high-net-worth investors. It also qualifies under the Trustee Investment Act and meets National Pension Commission requirements.
Pricing will be determined through a book-build process, benchmarked against the seven-year Federal Government of Nigeria bond plus a spread. Minimum subscription is set at ₦5 million, with additional investments allowed in multiples of ₦1,000.
The government has also left room to scale up the programme. The issuer may absorb oversubscriptions of up to ₦1.23 trillion under Phase One, allowing for additional non-cash bond allocations to GenCos if necessary.
Officials say proceeds from the bond will be used strictly to clear outstanding invoices owed to power producers. Repayment will be funded primarily through the federal budget, while recoveries from electricity distribution companies will serve as a secondary source.
The debt settlement effort targets one of the deepest financial wounds in Nigeria’s electricity market. Years of poor remittances by distribution companies have left NBET unable to meet payment obligations to GenCos. The resulting liquidity crunch has disrupted gas supply contracts, forced power plants to operate below capacity, and worsened nationwide electricity instability.
Industry estimates place GenCos’ outstanding receivables at about ₦4 trillion, with projections suggesting the figure could rise to ₦6 trillion by the end of the year if left unresolved. Analysts link the debt pile-up directly to recurring grid collapses and weak generation output.
In an investor notice, CardinalStone described the bond as carrying a coupon range of 16.25 to 16.75 percent. The firm said the instrument is designed to support electricity market reforms while offering investors sovereign-level comfort similar to conventional FGN bonds.
While the bond already enjoys a full government guarantee and pension fund clearance, approval from the Central Bank of Nigeria for repo and collateral eligibility is still being processed. Feedback on that status is expected shortly.
To drive investor participation, the Presidential Power Sector Debt Reduction Committee, chaired by the Minister of Finance and Coordinating Minister of the Economy, is scheduled to host a virtual investor forum on Wednesday, December 10, 2025. The session will bring together banks, pension fund administrators, asset managers, insurers, and other stakeholders to outline reform plans and the structure of the ₦1.23 trillion issuance window.
Power generation companies have also been invited to a separate engagement to discuss the bond’s mechanics. However, a sector insider said the programme has already sparked concern, noting that many operators still have unanswered questions about timelines, allocations, and long-term sustainability.
Despite the uncertainty, the bond launch signals a decisive attempt by the federal government to confront a debt crisis that has long undermined Nigeria’s electricity supply and economic growth.
