Nigeria Raises ₦729bn to Tackle Legacy Power-Sector Debt

Nigeria has raised 728.9 billion naira through a second bond issuance aimed at settling long-standing debts owed to electricity generators, as the government seeks to improve liquidity across the country’s power sector.

The Series 2 transaction was issued by NBET Finance Company, a special-purpose vehicle of Nigerian Bulk Electricity Trading, under the government’s Presidential Power Sector Financial Reforms Programme. Africa Finance Corporation acted as co-financial adviser alongside CardinalStone Partners.

The latest issuance brings the total raised under the programme to about 1.23 trillion naira, following the inaugural 501 billion naira Series 1 transaction completed in January.

Proceeds from the Series 2 bond will be used to settle verified overdue receivables owed to power generation companies for electricity supplied between February 2015 and March 2025. The government established the programme to address more than a decade of accumulated obligations across Nigeria’s electricity supply industry.

The second issuance was oversubscribed, attracting demand from pension fund administrators, banks, sovereign wealth funds and asset managers, according to Africa Finance Corporation.

The transaction follows the government’s full and timely payment of the first coupon and principal instalment on the Series 1 bonds in July, which AFC said reinforced investor confidence in the capital-markets approach to resolving legacy power-sector debt.

When fully implemented, the 4 trillion naira multi-instrument issuance programme is expected to address obligations linked to about 5,398MW of generation capacity and settle payments relating to 290,644.84 gigawatt-hours of electricity billed since February 2015.

The programme is being overseen by the Presidential Power Sector Debt Reduction Committee, with technical leadership from the Office of the Special Adviser to the President on Power and implementation through NBET’s finance vehicle.

Akin Odeyemi, managing director and chief executive of NBET, said converting outstanding receivables into liquidity would help generators meet obligations to gas suppliers, maintain plants and invest in additional capacity.

The debt-resolution programme forms part of wider reforms in Nigeria’s electricity market, including investments in consumer metering and transmission infrastructure and a shift towards bilateral electricity trading between wholesale market participants based on market-reflective pricing.

Source: FSX Business News