The Federal Government on Friday approved the sum of N213 billion facility to rescue private operators in the electricity market towards boosting electricity supply in the country.
The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, told State House correspondents at the Presidential Villa, Abuja, that Nigeria’s electricity supply has been characterized by three problems including inadequate gas for power supply, misalignment between the tariff and the true cost of running electricity businesses, and inability of generation companies to reliably produce the electricity that is possible with reduced volumes of gas.
Alison-Madueke who briefed journalists alongside, the Minister of Power, Prof. Chinedu Nebo, Central Bank of Nigeria (CBN) Governor, Godwin Emefuele, and Chairman Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi, added that the problems have resulted in revenue shortfalls for the new private companies and slowed down improvement in electricity supply.
“The CBN in collaboration with the Deposit Money Banks will provide a total facility of N213 billion to settle both the legacy gas debts as announced on August 2nd and also the shortfall in revenues to the sector since the handover of PHCN companies on November 1st, 2013.”
She added that N36 billion, will be tied to commitments to supply specific volumes of gas-for-power and to negotiate and execute bankable gas supply agreements with power plants.
“NERC will publish a reset tariff order (MYTO 2.1). This tariff order will take into account the CBN provided facility, current levels of energy output, the new baseline gas price and other variables that more closely reflect the true cost of running electricity businesses.”
The electricity market, which she stressed is mainly consisting of private operators, will repay the facility with a first-line charge on their revenues over a 10 year period.
The Petroleum Minister also said that there will be a moratorium on repayment of the credit facility by the distribution companies until electricity supply improves across the country.
This, she said, will ensure that the cost of electricity for ordinary consumers continues to be at affordable levels.
“The CBN will, on a case-by case basis, be working with the Deposit Money Banks on some of the prudential guidelines associated with acquisition loans for electricity assets through extended restructure of the debts repayment during the moratorium period.
“This will only apply where it is clear that strains on loans are a direct result of recent, unforseen adjustments in the policies that guide the electricity market.”
“The credit facility will be disbursed via commercial banks and a special purpose vehicle, which will be managed by a dedicated fund manager. This structure will ensure that the funds are repaid in full, within the time frame of the reset tariff order,” she stated.
Explaining the lingering fuel scarcity in the country, she said: “I have just come out from meetings with the unions and I do believe that we have come to fruitful conclusion. The lockdown will no longer exist after this time.”
Nebo said that the government is not just doing the bailout but doing what is expected of it to stabilize the market.
“By the end of the year, we should be doing 5,000 megawatts.” He added
According to him, Nigeria is fighting a real war concerning vandalization of pipelines in the country.
