Africa Finance Corporation- Nigeria Launches &#x20a6501bn Bond TO Transform Its Power Sector

Source: Supplied. Africa Finance Corporation (AFC) announces its role as co-financial adviser on the successful issuance of the inaugural tranche of bonds under the Federal Government of Nigeria’s Presidential Power Sector Financial Reforms Programme.

The landmark issuance, aimed at resolving over a decade of legacy debts in the electricity supply industry, marks a pivotal moment in the sector’s financial reform.

Infrastructure solutions provider, Africa Finance Corporation (AFC), acted as co-financial Adviser on the transaction, supporting the government’s efforts to boost liquidity, enhance GenCo performance, and create a more sustainable, investor-friendly electricity market nationwide.

The programme was overseen by the Presidential Power Sector Debt Reduction Committee (PPSDRC), with the Office of the Special Adviser to the President on Energy providing technical leadership and implemented through Nigerian Bulk Electricity Trading Plc (NBET)’s special purpose vehicle - NBET Finance Company Plc.

The issuance proceeds will settle verified, overdue receivables owed to Power Generation Companies (GenCos) for electricity supplied between February 2015 and March 2025, extinguishing legacy claims and injecting liquidity into the electricity industry.

This transformational initiative by the Federal Government of Nigeria is designed to restore financial stability, enhance liquidity and strengthen the balance sheet of Nigerian GenCos through the clearance of outstanding arrears.

By addressing these legacy obligations, the initiative is expected to boost domestic and international investor confidence and attract fresh capital across the entire electricity-sector value chain.

Pension-led financing

The transaction received strong support from the pension fund investment community with about 50% of the total financing secured from Pension Fund Administrators, successfully mobilising domestic capital for critical electricity infrastructure in Nigeria.

AFC provided comprehensive financial advisory services to the Federal Government of Nigeria on this landmark transaction, including the design of the programme’s negotiation strategy framework, support in negotiating and executing Settlement Agreements with GenCos, and in the structuring of the bond issuance.

Working in partnership with CardinalStone Partners as co-financial advisers, this transaction reflects AFC’s deep and local market expertise in delivering complex, high-impact policy advice and financial solutions that catalyse sector-wide reforms.

Olu Verheijen, Special Advisor to the President on Energy said: “The Programme represents a decisive reset of Nigeria’s electricity market, combining debt resolution with broader financial and structural reforms.

"AFC brought strong sector expertise, deep local market knowledge, and a clear understanding of the market’s commercial complexities, playing a critical role in delivering a credible outcome that supports liquidity restoration, investor confidence and long-term sustainability.”

Banji Fehintola, Executive Board Member and Head, Financial Services at Africa Finance Corporation said: "The successful issuance of the inaugural tranche under the Power Sector Bond Programme underscores AFC’s commitment to supporting transformative reforms in Nigeria’s power sector.

"By resolving long-standing liquidity challenges and restoring confidence among investors and operators, this transaction lays the foundation for sustainable growth and improved electricity supply across the country."

Power-sector transformation

When completed, the programme will impact approximately 5,398MW of electricity-generation capacity by Nigerian GenCos, effectively finalising settlement of payments for 290,644.84GWhr of electricity billed since February 2015 and providing a strong foundation for new investments into capacity enhancement and expansion by companies serving 12 million active registered customers across the country.

The programme forms a fundamental aspect of the energy-sector reforms by the Nigerian government, alongside significant ongoing investments in consumer metering and transmission infrastructure, and a transition to bilateral electricity trading between wholesale counterparties based on market-reflective pricing.

Together, these reforms are aimed at ensuring the evolution of a viable and sustainable electricity market in Nigeria to support long-term industrial growth and development.