*Intervention funds loans not grants – BPE insists
13 February 2015, Sweetcrude, Abuja – The Central Bank of Nigeria (CBN) yesterday disbursed N39.52 billion in loans to ten power generation and distribution companies in the country to enable them improve capacity and boost efficiency.
This was coming barely two weeks after the first tranche of N18.2bn was disbursed to five power firms by the CBN.
The amount, given at an interest rate of 10 per cent, with a repayment period of 10 years, is part of the N213bn Nigerian Electricity Market Stabilisation Facility.
Thursday’s disbursement brings the total intervention made under the stabilisation facility to N57.72bn.
The CBN Governor, Mr. Godwin Emefiele, urged the firms to utilise the funds to upgrade their infrastructure.
He listed some of the areas where the funds were to be invested to include plant maintenance, upgrade of transmission and distribution networks, acquisition of transformers and effective metering of consumers.
“We are witnessing the disbursement of the NEMSF to some Discos and Gencos. You will recall that on February 2, we disbursed the first tranche to two Discos and three Gencos. At that session, N18.2bn was disbursed and I am happy to inform you that we have moved on to the second batch of disbursement and we will be disbursing N39.5bn, which brings the total disbursement to over N50bn,” Emefiele said.
Emefiele added that with the conclusion of the second phase of the disbursement, the central bank had taken a quantum leap toward the disbursement of the entire N213bn.
He said the Gencos and Discos would not be the only beneficiaries of the loan, but that gas suppliers in the electricity market would also benefit from the fund.
According to him, “We want to unlock the potential of the power sector and so this facility is meant to catalyse the power sector.
“The fund will be used to procure meters and certain spares that they need to improve their business and power losses in the grid.”
Four power distribution and six generation companies had their chief executive officers in attendance during the second batch of the disbursement.
The Enugu Electricity Distribution Company received the highest amount of N10.25bn, followed by Kano, Port Harcourt and Eko Electricity Distribution Companies, with N7.64bn, N6.58bn and N43.31m, respectively.
Among the generation companies, Egbin received the highest amount of N5.1bn, while Delta, Jebba, Shiroro, Geregu and Kanji Hydroelectric Plc followed with N3.92bn, N2.38bn, N938.99m and N684.44m in that order.
The disbursement of the loan is a follow- up to the Memorandum of Understanding, which was signed last December by the CBN, participating Deposit Money Banks and the Nigerian Electricity Regulatory Commission.
The agreement is to prepare the banks to channel funds towards de-risking the value chain in the electricity supply market.
Also speaking at the ceremony, the Chairman, Nigerian Electricity Regulatory Commission, NERC, Dr. Sam Amadi, said the disbursement of the fund would lead to efficiency in power generation and distribution.
He said it would also enable the power firms to speedily deliver on their commitments, noting that with the provision of the loans, Nigerians would begin to see improvement in power supply.
Meanwhile, the Bureau of Public Enterprises has explained that the fund being advanced by the Federal Government to electricity distribution and generation companies is a loan rather than a grant.
The Director-General, BPE, Mr. Benjamin Dikki, said this in a statement made available in Abuja on Wednesday.
Dikki explained that from conception of the power sector reforms, it was calculated that 40 to 60 per cent of the power being generated was lost to technical faults and inefficiencies in transmission and distribution occasioned by inadequate investment and poor maintenance culture.
According to him, the losses that no private sector investor will bear are to be made good by the government via subsidies over an initial three-year period in order to give the private sector investors time to make the necessary investments to improve the distribution network.
He added that due to revenue challenges, the government could not meet the obligation; hence the decision that the Central Bank of Nigeria should intervene and grant a loan to the power sector.
Dikki emphasised that the fund was a loan to the power market to enable investors to improve infrastructure.
The BPE boss said the CBN, BPE and the NERC would monitor the utilisation of the fund to ensure that improvement in the power infrastructure was achieved within the next five years, adding that the loan was repayable by the market over a period of 10 years.
He noted that the greatest challenge facing power generation in the country was non-availability of gas, adding that previous administrations did not make investment in gas infrastructure.
Dikki added that, “In the years gone by, no appropriate attention was given to the issue of gas supply to the power generation companies. No previous government prioritised the piping of gas to the generation companies, hence the situation we find ourselves now.
“It is, however, gladdening to note that the present administration is doing everything possible to overcome the challenge.
“The Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation, the gas companies and other stakeholders are working hard to ensure that gas supply to the power generation companies is achieved.”