The Nigerian Bulk Electricity Trading Plc has commenced settling outstanding obligations to power generation companies and their associated gas suppliers following the issuance of N728.979bn in bonds under the Federal Government’s N4tn Power Sector Multi-Instrument Issuance Programme.

The settlement, which forms part of President Bola Tinubu’s Power Sector Debt Reduction Programme, comprises N402bn in cash bonds and N326.979bn in non-cash bonds.

The development marks the beginning of payments under the second series of the bond programme, which the government designed to address historical debts in the electricity sector and improve the financial position of companies involved in power generation and gas supply.

NBET’s Managing Director and Chief Executive Officer, Akin Odeyemi, disclosed this in a statement issued on Friday, describing the settlement as a major step towards resolving longstanding financial obligations and restoring liquidity across the electricity value chain.

He said the successful issuance and signing of the Series 2 bonds had enabled the company to commence settling participating generation companies and their associated gas companies in line with the approved framework.

“The Nigerian Bulk Electricity Trading Plc has commenced the settlement of participating Generation Companies and their associated Gas Companies following the successful issuance and signing of the N728.979 billion Series 2 Bonds under the ₦4 trillion Power Sector Multi-Instrument Issuance Programme.

“This milestone represents a significant step in the implementation of the Presidential Power Sector Debt Reduction Programme, under the visionary leadership of His Excellency, President Bola Ahmed Tinubu, GCFR, and in furtherance of the objectives of the Renewed Hope Agenda,” Odeyemi said.

He added that the settlement was being implemented through “a combination of N402,000,000,000.00 in Cash Bonds and N326,979,000,000.00 in Non-Cash Bonds, in accordance with the approved settlement framework.”

The N728.979bn Series 2 issuance represents a substantial portion of the N4tn multi-instrument programme. However, NBET did not disclose in the statement the individual amounts allocated to participating generation companies and gas suppliers or the number of beneficiaries covered by the current settlement.

The programme is intended to address accumulated obligations that have weakened the finances of electricity market participants over the years. Generation companies have repeatedly identified unpaid invoices and inadequate revenue collection as constraints on their ability to maintain plants, pay gas suppliers and sustain electricity production.

Gas suppliers are also central to the process because gas-fired power plants depend on reliable fuel supplies to generate electricity. Settling outstanding obligations across both segments is expected to ease some of the financial pressures affecting the power generation chain.

Odeyemi said the settlement went beyond clearing old debts, arguing that it would help establish a more sustainable financial framework for the 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,” he said.

He said the initiative would also support a gradual shift towards a market in which payments are more predictable, and companies can plan their operations with greater commercial certainty.

“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, characterised by improved payment discipline, stronger liquidity and greater commercial certainty to support continued investment across the value chain,” the NBET chief said.

He added that a more financially stable generation segment could help companies maintain and improve their power plants, support higher electricity output and improve the reliability of supply.

“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,” Odeyemi said.

The commencement of the settlement comes amid longstanding concerns over the financial sustainability of Nigeria’s electricity market. The sector operates through a chain involving gas suppliers, generation companies, transmission infrastructure, distribution companies and market operators, with payment shortfalls affecting the ability of participants to meet their obligations.

Under the debt reduction initiative, the government is seeking to settle qualifying historical liabilities through the issuance of bonds rather than relying solely on immediate cash payments. The Series 2 structure combines cash bonds with non-cash bonds, although NBET’s statement did not provide details of the redemption schedules, interest terms or the treatment of individual claims.

The use of bonds means that the settlement should not automatically be interpreted as the entire N728.979bn being paid out in cash. Only N402bn of the amount is classified as cash bonds, while N326.979bn is in non-cash bonds.

Odeyemi said the programme reflected the Federal Government’s commitment to resolving longstanding obligations and building a commercially viable 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,” he said.

He added that NBET was already preparing for the next stage of the initiative.

“The current focus of Nigerian Bulk Electricity Trading Plc is on preparatory activities towards the commencement of the second phase of the Programme, as we continue to advance the objectives of the N4tn Power Sector Multi-Instrument Issuance Programme,” Odeyemi said.