Bankers Committee to clear N25bn gas debt

cbn-q415August 2014, Abuja – The Bankers Committee, yesterday, said it would help the privatised power firms clear N25 billion debts to gas producing companies.
The Committee had also decided to provide funding support to the 18 rice milling companies across the country so as to boost local production, reduce foreign exchange spent on rice importation and boost job creation.

These were the highlights of the 317th meeting of the Committee in CBN Lagos office, yesterday.
The Bankers Committee comprises the Central Bank of Nigeria, Nigeria Deposit Insurance Corporation and chief executive officers of banks.
Speaking to journalists after the meeting, Managing Director/Chief Executive, Ecobank Nigeria Limited, Mr. Jibril Aku said that the Committee decided to set up a Special Purpose Vehicle, SPV, that would be used to clear the debt.

He spoke in company of the Director of Banking Supervision, CBN, Mrs. Tokunbo Martins, Managing Director/Chief Executive, Skye Bank PLC, Mr. Timothy Oguntayo and the Managing Director/Chief Executive, Access Bank Plc, Mr. Herbert Wigwe

Aku noted that though the N25 billion was inherited by the power firms from the PHCN legacy firms, it had become a challenge to increasing gas supply for power generation.
He said: “Today, there is enough incentives for the gas companies to produce gas and that is necessary because when you look at the 26 generating stations in Nigeria, they are all gas dependent. So, we feel, that is one major incentive that would help the gas companies to begin to produce locally.

“Another incentive has to do with the legacy debt. The legacy PHCN had accumulated of about N25 billion and the gas companies have always been agitating that the debt should be paid otherwise they would not produce in order not to begin to accumulate new debts.
“The Bankers Committee is willing to support an initiative where an SPV would be set up, that would provide loans to clear that debt and over time, the loans would be recovered from the multi-year tariff order, MYTO, and direct deductions. The Central Bank would play a key role in assisting the banks to do that.

“The banking community is willing to support and resolve that debt and when you look at the increase in the gas price we believe that most of the problem of gas to power would have been resolved and we will begin to see the generating companies produce at a higher level and increase the power generation. So this is an initiative with full commitment of the banking community to support it.”

Also, speaking at the briefing, Managing Director/Chief Executive, Skye Bank PLC, Mr. Timothy Oguntayo disclosed that the Bankers Committee in a bid to address the issue of food security, had decided to provide support to the 18 rice milling firms in the country.
He said the aim is to reduce the amount of foreign exchange spent on rice importation annually and also help generate jobs.

He said in this regard, the Bankers Committee would provide funds to help the rice milling firms to produce at full capacity, and help them to go into rice farming for backward integration.
This, he said, would lead to creation of more jobs in the economy, and enhance the goal of food security.
He said the modalities for the funding support was between the CBN and the Ministry of Agriculture and Rural Development.

On his part, Managing Director/Chief Executive, Access Bank Plc, Mr. Herbert Wigwe said that the Bankers Committee also decided to contribute N15 billion to the fund set up by the Federal Government for victims of terrorism, which is known as Terrorism Victims Support Fund.
He said the contribution would be shared among the CBN, Nigeria Deposit Insurance Corporation, NDIC, and the banks.

– Vanguard

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