The Nigerian Bulk Electricity Trading Plc (NBET) has announced the successful closure of the first tranche of the N4 trillion Power Sector Multi-Instrument Issuance Programme, with a N501.021 billion bond issue.
In a statement on Tuesday, the agency said the bond comprises a fully subscribed N300 billion issued to market participants, including asset managers, banks, pension funds, and retail investors, and N201.021 billion issued to power generation companies (GenCos) that have signed the settlement agreement.
“The Nigerian Bulk Electricity Trading Plc (NBET) is pleased to announce the successful close of the first tranche under the N4,000,000,000,000 Power Sector Multi-Instrument Issuance Programme.
“The inaugural bond issue of N501,021,000,000 bond comprises a fully subscribed N300,000,000,000 bond issuance to the market (Asset Managers, Banks, Pension Funds and Retail Investors) and N201,021,000,000 bond issued to Power Generation Companies (GenCos) that have signed the settlement agreement,” the statement said.
In April last year, GenCos warned of imminent shutdown due to a N4 trillion debt owed by the Nigerian government for electricity generated and supplied to the national grid.
The firms said the debt, which includes N2 trillion for 2024 and N1.9 trillion in legacy debts, is threatening the continued operation of their power generation plants.
In July last year, during a meeting with members of the Association of Power Generation Companies (APGC), led by Sani Bello, at the Presidential Villa in Abuja, President Bola Tinubu assured them of his administration’s commitment to resolving the liquidity challenges in the power sector.
At the time, the Special Adviser to the President on Energy, Olu Verheijen, disclosed that a N4 trillion bond programme has received anticipatory approval from Mr Tinubu to address the liquidity shortfall in the sector.
On Tuesday, NBET said the 7 year bonds which were issued by its Finance Company Plc (a special purpose vehicle established for this transaction) are fully guaranteed by the full faith and credit of the federal government of Nigeria.
It explained that the successful completion of this inaugural tranche marks a critical milestone in the implementation of the programme and reflects strong market confidence in the government’s reform agenda for the power sector.
Commenting on the bond issue, the Acting Managing Director of NBET, Johnson Akinnawo said: “The successful close of the N501 billion bond represents a major step forward in resolving the long-standing challenge that has constrained the power sector for years.
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“This intervention will significantly improve liquidity across the value chain, enable operators to stabilise their operations and support renewed investment in the Nigerian Power Sector.”
According to the statement, CardinalStone Partners Limited, a leading investment banking firm in Nigeria, led the consortium of appointed professional parties as Lead Financial Adviser and Lead Issuing House to successfully execute the N501.021 billion series 1 bond issue working closely with the NBET that acted as sponsor on the transaction and the Office of the Special Adviser Energy that led the settlement negotiations and engagements with the generation companies including championing the Presidential Power Sector Debt Reduction Programme (PPSDRP) initiative.
“These settlements form part of Phase 1 of the programme, which is designed to restore liquidity to the power sector, strengthen the balance sheets of critical market participants and to create a more sustainable foundation for electricity supply in Nigeria,” the statement said.
Mr Akinnawo added that NBET remains committed to working closely with the federal government, market participants and transaction advisers to ensure the transparent and efficient deployment of proceeds in line with the objectives of the PPSDRP.
NBET reaffirmed its commitment to market reforms aimed at enhancing the long-term financial viability of Nigeria’s electricity market.
