FG’s N701bn intervention for power sector not sufficient – NERC

*Power transmission towers.

Oscarline Onwuemenyi

11 March 2017, Sweetcrude, Abuja – The Nigerian Electricity Regulatory Commission (NERC) has said the recently approved N701 billion Federal Government intervention fund to the Nigeria Bulk Electricity Trading (NBET) Plc to facilitate the power sector value chain is not sufficient.

The fund was approved by the Federal Executive Council to allow NBET pay for power bought from generating companies seeing that the Discos’ revenue could not cover the cost.

The Vice Chairman of the Commission, Mr. Sanusi Garba, however, said that the fund will not be enough to facilitate the power sector.

“The N701 billion fund approved by the Federal Executive Council (FEC) is necessary but not sufficient intervention for resolving the liquidity challenge in the power sector. Other regulatory interventions would be enforced by the regulatory commission,” he said.

The Minister of Power, Works and Housing, Babatunde Fashola, in a meeting with representatives of NERC and the Central Bank of Nigeria (CBN), supported the idea of extending loans to Discos to help them run their business especially considering the fact that they aren’t bankable.

According to Fashola, “They do not have the financial resources to deal with the critical infrastructure. They are running a business, they too are being owed and they owe people. They owe banks. The meeting we just finished here was on efforts to give them loans (some of them) to pay their debts.

“Who will give them loans to supply you transformers, who will give them loans to repair the damaged distribution lines? Nobody will give them money.”

The Federal Executive Council last week approved a N701 billion guarantee for the Nigerian Bulk Electricity Trading (NBET) Plc.

The guarantee was approved at a meeting with the council presided over by then acting President, Prof. Yemi Osibanjo, in order to help improve NBET’s liquidity.

The money would serve as Power Assurance Guarantee for Nigeria Bulk Electricity Trading, NBET.

The Minister of Power, Works and Housing, Mr. Babatunde Fashola, after the FEC meeting, said that the Central Bank of Nigeria (CBN) will provide the guarantee.

Fashola disclosed that the liquidity problems in the market had affected NBET’s ability to deliver on its Public Private Partnership obligations to the Gencos and the government is making effort to stabilise the generation part of the power value chain.

According to him, this will, in turn, encourage profit oriented investors to invest in power generation in the country. He also noted that power generation had increased to 4,000 megawatts.

The minister stated: “So, going forward, in order to strengthen NBET, CBN is proving a payment assurance guarantee for any energy produced by any Genco so that they can pay their gas suppliers when they get paid so that the hydros can continue to operate.

“As to the quantum of the guarantee, it’s for two years from January this year right through to December 2018. It’s capped at a maximum of N701bn, but it’s to be drawn monthly.”

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