The Federal Government has commenced efforts to clear outstanding debts in the power sector as the Nigerian Bulk Electricity Trading Plc (NBET) begins settling participating electricity generation companies (GenCos) and their associated gas suppliers under a ₦728.979 billion bond programme.
The settlement follows the successful issuance and signing of the Series 2 Bonds under the Federal Government’s ₦4 trillion Power Sector Multi-Instrument Issuance Programme, designed to address longstanding financial obligations in the electricity industry.
The initiative is being implemented under President Bola Tinubu’s Presidential Power Sector Debt Reduction Programme as part of the administration’s Renewed Hope Agenda.
In a statement, NBET said the settlement comprises ₦402 billion in cash bonds and ₦326.979 billion in non-cash bonds, in line with the approved settlement framework.
The company described the development as a significant milestone in addressing historical debts, restoring liquidity across the electricity value chain and strengthening the financial position of power sector participants.
NBET said the settlement would help tackle longstanding financial challenges in the industry while creating a pathway towards a more sustainable electricity market.
“The ongoing settlement marks a major step towards addressing historical obligations, restoring liquidity across the electricity value chain, and strengthening the financial position of power sector participants,” the statement said.
The company explained that resolving legacy obligations was essential to improving cash flow and strengthening commercial relationships among businesses operating in the electricity sector.
It added that the programme would support the transition to a more sustainable market cash-flow framework, with improved payment discipline and greater certainty for investors.
“Beyond addressing legacy obligations, this development provides a pathway for the Nigerian electricity market to progressively transition towards a more sustainable market cash-flow framework,” NBET stated.
According to the company, the new framework is expected to promote “improved payment discipline, stronger liquidity and greater commercial certainty to support continued investment across the value chain.”
NBET further said the settlement could strengthen the ability of generation companies to maintain their facilities and improve electricity generation, provided the improved liquidity translates into sustained investment in their operations.
“A more financially stable generation segment is also expected to strengthen the capacity of GenCos to sustain and improve their generation assets, support increased electricity generation, and contribute to greater reliability across the Nigerian electricity market,” the statement said.
The company maintained that the initiative demonstrated the Federal Government’s commitment to resolving longstanding financial obligations and building a more sustainable electricity market.
“This milestone demonstrates the Federal Government’s commitment, under the leadership of His Excellency, President Bola Ahmed Tinubu, GCFR, to resolving longstanding legacy obligations while laying the foundation for a financially sustainable, commercially viable and investment-driven electricity market,” NBET stated.
The programme forms part of the broader ₦4 trillion Power Sector Multi-Instrument Issuance Programme, which is aimed at addressing financial challenges that have affected the electricity value chain.
NBET disclosed that its immediate priority was to complete preparatory activities for the second phase of the programme.
“The current focus of Nigerian Bulk Electricity Trading Plc (NBET) is on preparatory activities towards the commencement of the second phase of the Programme, as we continue to advance the objectives of the ₦4 trillion Power Sector Multi-Instrument Issuance Programme,” the company said.
The statement was signed by NBET Managing Director and Chief Executive Officer, Akin Odeyemi.