N4tn power sector bond launched to repay GenCo debts, enhance electricity stability, and attract investment with sovereign guarantee backing

The Federal Government on Thursday announced that the newly launched N4tn power sector liquidity bond, aimed at settling decade-long debts owed to electricity generation companies, will be fully incorporated into Nigeria’s Medium-Term Expenditure Framework.

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Officials said this move strengthens the bond’s credibility and guarantees repayment, while also increasing the nation’s public debt by N4tn.

Speaking at a virtual investor forum convened by the Federal Ministries of Finance and Power, CardinalStone Partners’ Group Managing Director, Michael Nzewi, described the bond as central to the Presidential Power Sector Debt Reduction Programme.

He emphasised that, unlike previous interventions, this instrument is backed by a sovereign guarantee and elevates the debt to a statutory government obligation.

“These bonds are backed by the Federal Government. The debt will be included in the medium-term federal framework. This is essentially an insurance by the government,” Nzewi said, adding that liquidity gaps from generation and distribution companies are fully covered.

The first tranche of the programme, totalling N590bn, was launched earlier this week and forms part of a broader N4tn NBET Finance Company Plc Bond Programme.

It includes N300bn in cash bonds issued to the market and N290bn in non-cash bonds directly allotted to generation companies under identical terms.

The seven-year fixed-rate bond will be issued between November and December 2025, redeemed on an amortising basis, and paid semi-annually in arrears.

CardinalStone Partners Limited serves as lead issuing house and financial adviser.

Onyebuchim Obiyemi, Head of Investment Banking at CardinalStone, explained that the special-purpose vehicle, NBET Finance Company Plc, was established to ring-fence historic liabilities and receivables, creating a stand-alone entity responsible for the entire transaction.

This structure removes the burden from NBET and improves transparency for investors.

Minister of Power, Adebayo Adelabu, said the reform would be complemented by improved service delivery from distribution companies, particularly as more customers transition to higher tariff bands.

He noted that targeted subsidies would remain for vulnerable households while those able to pay for reliable electricity are expected to do so.

“The key is to redesign the subsidy regime so it reaches only those who truly need it,” he said.

NBET Acting Managing Director, Johnson Akinnawo, described the programme as a “strategic reset” rather than a bailout.

He highlighted that the sovereign guarantee provides the “sunlight and water” required for investor confidence and that extensive claim validation had culminated in a debt instrument designed to stabilise the electricity ecosystem.

“This bond issuance is our collective tree-planting. It is an investment in Nigeria’s energy security,” he said, thanking President Bola Tinubu, the finance and power ministers, and institutional investors for their support.

The virtual forum drew participation from over 600 institutional investors, including pension funds, asset managers, banks, insurers, and trustees.

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Officials said incorporating the debt into the MTEF enhances transparency, repayment certainty, and credit quality, key factors for restoring confidence in Nigeria’s electricity sector.