•14 GenCos sign a contract
By Abuja’s Obas Esiedesa
In an attempt to lower the nearly N6 trillion in liabilities in the electricity industry, the Federal Government has collected N501.02 billion from the bond market to start paying off outstanding debts owing to power generation firms (GenCos).
Two bond tranches, a N300 billion seven-year Series 1 Tranche A bond and a N201.02 billion seven-year Series 1 Tranche B bond, both priced at 17.50 percent, were issued to raise the cash. Under the Presidential Power Sector Debt Reduction Programme (PPSDRP), the Federal Government completely guarantees the bonds, which were issued by NBET Finance Company Plc, a special purpose company established by the Nigerian Bulk Electricity Trading Plc (NBET).
The initiative was intended to settle long-standing payment arrears owing to GenCos and reset the energy market, according to Mrs. Olu Verheijen, President Bola Tinubu’s Special Advisor on Energy, who spoke during the agreement signing ceremony in Lagos.
She claims that negotiated agreements are being used to settle confirmed debts for electricity provided between February 2015 and March 2025. She revealed that Full and Final Settlement Agreements totaling over N827 billion have been signed by 14 generating companies.
Verheijen stated that the first and second installment payments to participating GenCos, estimated at N421.42 billion, or around half of the negotiated settlement value, will be financed by the proceeds from the Series 1 bond offering. She stated that a combination of cash and notes would be used to make payments.
The Director-General of the Debt Management Office (DMO), Ms. Patience Oniha, spoke on behalf of Mr. Wale Edun, Minister of Finance and Coordinating Minister of the Economy, who acknowledged that legacy power sector debts had hampered growth for years and emphasized that resolving them was essential to sector reform.
The bond offering, according to Mr. Johnson Akinnawo, Acting Managing Director of NBET, is a significant milestone that would enhance liquidity throughout the power value chain and encourage new investments.
First Independent Power Limited, Geregu Power Plc, Ibom Power Company Limited, Mabon Limited, and Niger Delta Power Holding Company Limited are a few of the GenCos that signed the agreement.
