FG raises N728.9bn in second bond issuance for power sector debt

The federal government has raised N728.9 billion in bonds to
offset the N4 trillion legacy debt owed to electricity generation companies
(GenCos).

 

Speaking at the launch in Abuja on Monday, Taiwo Oyedele,
minister of finance and coordinating minister of the economy, said series 2
comprises N402 billion in cash bonds, while another N326.9 billion was allotted
as non-cash bonds to participating GenCos.

The second bond brings the total issuance to N1.23 trillion.

“This transaction addresses an important challenge in
Nigeria’s electricity market, which is accumulated legacy obligations that have
weakened liquidity, constrained investments and affected,” Oyedele said.

The minister said the outstanding obligations had affected
confidence across the electricity value chain, adding that the federal
government’s objective is to resolve legitimate legacy obligations through a
structured and transparent process.

Oyedele said the presidential power sector debt reduction
programme must be accompanied by reforms capable of preventing the recurrence
of similar debts.

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

Akin Odeyemi, chief executive officer (CEO), Nigerian Bulk
Electricity Trading (NBET) Plc, 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.

Also speaking, Verheijen, special adviser to President Bola
Tinubu on oil and gas, said the agreements represent 21 power plants, adding
that series 2 would deepen the implementation of the debt reduction programme.

“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.

On his part, Joseph Tegbe, minister of power, said the bond
issuance demonstrated the federal government’s commitment to addressing
structural challenges confronting the electricity industry.

The federal government issued a N501 billion inaugural bond
under the programme in January, launching the second series in July.

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