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

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).

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

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

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

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

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

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

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

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

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

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

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

“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.

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

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

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

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

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

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

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

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

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

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

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

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.

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

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

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

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

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

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

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

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

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

(NAN)