The Federal Government has commenced repayment of the N4tn owed to Power Generation Companies with the launch of a N590bn first-tranche bond issuance.

This initial tranche forms part of the broader N4tn NBET Finance Company Plc Bond Programme and is backed by a Federal Government guarantee.

It includes N300bn in cash bonds to be floated on the market and N290bn in non-cash bonds to be directly allotted to GenCos on the same terms.

Findings revealed that the details from the bond term sheet show that the Series 1 bond is scheduled for issuance between November and December 2025, according to The Punch.

CardinalStone Partners Limited is acting as the lead issuing house and financial adviser.

According to the term sheet, “Series 1 Tranche A involves N300bn issued to the market for cash, while N290bn under Tranche B is allotted to the GenCos on identical terms. The bond will be issued between November and December, with a seven-year tenor on a fixed-rate coupon, redeemed on an amortising basis and paid semi-annually in arrears.”

The bond issuance represents a significant move by President Bola Tinubu’s administration to address what experts consider one of the most severe financial challenges in Nigeria’s power sector. The Series 1 bond has a seven-year tenor, a fixed coupon rate, and semi-annual interest payments, and will be amortised over its duration.

It will be listed on both the Nigerian Exchange and the FMDQ Securities Exchange, and will qualify under the Trustee Investment Act, making it eligible for investment by pension fund administrators, banks, asset managers, insurers, and high-net-worth investors.

The issuer also has the discretion to absorb up to N1.23tn in oversubscription, allowing for additional non-cash bond allocations to GenCos if needed.

The term sheet added, “Pricing will be based on the yield of the seven-year FGN bond plus a spread, and the issuance will be conducted through a book-build process. The minimum subscription is N5m, representing 5,000 units at N1,000 each, with additional subscriptions in multiples of N1,000.

“Proceeds from the issuance will be used to settle outstanding liabilities owed to GenCos. The instrument is guaranteed by the full faith and credit of the Federal Government, enjoys CBN liquidity status, meets PenCom compliance requirements, qualifies under the Trustee Investment Act, and will be listed on both the Nigerian Exchange Limited and the FMDQ OTC Securities Exchange.”

It added that “oversubscription may be absorbed at the discretion of the issuer up to a maximum of N1,230,000,000,000 approved for Phase 1 of this transaction. The issuer reserves the right to increase the size of the non-cash bonds to be issued to the GenCos under any Series or accommodate additional allotments as may be required.”

Nigeria’s power sector has long been burdened by NBET’s inability to pay GenCos’ invoices, a problem driven by chronic under-remittance from electricity distribution companies.

GenCos have repeatedly warned that the mounting debt—currently estimated at N4tn and projected to hit N6tn by year-end, has crippled their operations, undermined gas supply contracts, and forced many power plants to operate far below capacity.