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Africa Finance Corporation (AFC) has supported the successful close of a N728.9 billion Series 2 power sector bond issuance aimed at reducing long-standing debts in Nigeria's electricity industry and strengthening ongoing reforms in the sector.

The transaction, executed by NBET Finance Company Plc under the Federal Government's Presidential Power Sector Financial Reforms Programme (PPSFRP), is the second bond issuance under a broader N4 trillion Power Sector Multi-Instrument Issuance Programme designed to address legacy liabilities owed to electricity generation companies (GenCos).

AFC served as Co-Financial Adviser on the deal, alongside CardinalStone Partners. The corporation had previously played the same role in the N501 billion Series 1 issuance completed in January 2026.

With the successful close of Series 2, total funds raised under the programme have reached approximately N1.23 trillion, marking a significant milestone in efforts to restore financial stability to Nigeria's electricity value chain.

The proceeds will be used to settle verified outstanding receivables owed to power generation companies for electricity supplied between February 2015 and March 2025. The initiative is expected to improve liquidity across the sector, enabling generators to meet obligations to gas suppliers, maintain infrastructure and invest in additional generation capacity.

AFC said its advisory role included supporting negotiations and settlement agreements with participating GenCos, structuring the bond's cash and non-cash tranches, and engaging investors ahead of the offer.

"Closing the second issuance within eight months of the inaugural series shows the programme is working as designed. Verified legacy obligations are being converted into transparent, investable instruments, and domestic investors are backing that approach," said Banji Fehintola, Executive Board Member and Head of Financial Services at AFC.

He added that the corporation remained committed to supporting reforms that would restore liquidity to the power sector and encourage fresh investment in electricity generation.

The bond issuance attracted strong interest from pension fund administrators, banks, sovereign wealth funds and asset managers, with the offer reported to be oversubscribed.

The transaction follows the full and timely payment of the first coupon and principal instalment on the Series 1 bonds in July 2026, a development viewed by market participants as evidence of the Federal Government's commitment to the programme.

According to NBET Managing Director and Chief Executive Officer Akin Odeyemi, the clearing of verified debts will strengthen the financial position of generation companies and improve liquidity throughout the electricity supply chain.

"For too long, verified receivables have sat on GenCos' balance sheets, limiting their ability to pay gas suppliers, maintain plants and invest in new capacity. With Series 2, we are turning more of those arrears into liquidity across the electricity value chain," he said.

When fully implemented, the programme is expected to support approximately 5,398 megawatts of electricity generation capacity and settle payments relating to more than 290,000 gigawatt-hours of electricity supplied since 2015. The reforms are expected to benefit companies serving around 12 million registered electricity customers nationwide.

The debt reduction programme forms part of broader power sector reforms that include investments in consumer metering, transmission infrastructure and a shift towards bilateral electricity trading based on market-reflective pricing. Government officials say the measures are intended to create a financially sustainable electricity market capable of supporting Nigeria's long-term economic growth and industrial development.