While the initiative will increase Nigeria’s public debt by N4 trillion, government officials and financial advisers emphasized that the instrument is central to restoring confidence in the nation’s electricity supply industry.
Speaking at a virtual investor forum convened by the Federal Ministries of Finance and Power, CardinalStone Partners’ Group Managing Director, Michael Nzewi, clarified that the bond differs from previous interventions, which failed to close liquidity gaps. “These bonds are backed by the Federal Government. Inclusion in the medium-term federal framework makes it a statutory government obligation. This essentially provides insurance for investors,” Nzewi said.
First Tranche Already Underway
The government began the repayment process with the launch of a N590 billion first-tranche bond issuance earlier this week. The tranche, part of the wider N4 trillion NBET Finance Company Plc Bond Programme, is guaranteed by the Federal Government. It comprises N300 billion in cash bonds offered to the market and N290 billion in non-cash bonds directly allotted to GenCos on identical terms.
According to the bond term sheet, the Series 1 issuance will run between November and December 2025, featuring a seven-year tenor with a fixed-rate coupon, paid semi-annually on an amortising basis. CardinalStone Partners Limited serves as lead issuing house and financial adviser.
Unlike traditional sovereign issuances that may disappear into general government financing, the N4 trillion bond has a defined purpose: injecting liquidity into the power sector to enhance its financial viability and lay the foundation for the sector’s next phase of development.
Special-Purpose Vehicle to Ensure Transparency
Onyebuchim Obiyemi, Head of Investment Banking at CardinalStone, explained that the issuer is NBET Finance Company Plc, a special-purpose vehicle (SPV) sponsored by the Nigerian Bulk Electricity Trading Plc. The SPV structure is designed to ring-fence both historic liabilities and receivables, creating a stand-alone entity responsible for the entire transaction.
“All debts owed to GenCos between February 2015 and March 2025, as well as receivables due from distribution companies over the same period, are migrated to the SPV,” Obiyemi said. “This structure removes the burden from NBET and improves transparency for investors.”
Reform Coupled With Improved Service
Minister of Power Adebayo Adelabu emphasized that the bond is part of broader reforms to improve service delivery by distribution companies (DisCos), especially as more customers migrate to Band A. He clarified that subsidies for vulnerable households will remain, while those who can afford reliable electricity are expected to pay.
“The key is to redesign the subsidy regime so it reaches only those who truly need it,” Adelabu said, adding that the government will monitor DisCos more closely to ensure value for money.
NBET’s Acting Managing Director, Johnson Akinnawo, described the programme as a “strategic reset” rather than another bailout, noting that the sovereign guarantee provides the “sunlight and water” necessary for investor confidence. “This bond issuance is our collective tree-planting. It is an investment in Nigeria’s energy security,” he said.
Investor Engagement
Thursday’s investor forum attracted more than 600 institutional participants, including pension funds, asset managers, banks, insurers, and trustees. The event formally marked the launch of the Presidential Power Sector Debt Reduction Programme, which aims to clear historical GenCo debts, stabilise market cash flows, and attract fresh investment into Nigeria’s electricity generation, transmission, and distribution infrastructure.
By linking the N4 trillion bond to the MTEF, the government has placed the debt within Nigeria’s medium-term fiscal planning, enhancing transparency, repayment certainty, and credit quality—three factors investors have long demanded from the sector.