The announcement was made during an inter-agency initiative aimed at ensuring efficient gas supply for power generation, and finding a lasting solution to power supply challenges.
A statement from the spokesman of the Nigerian National Petroleum Corporation, said the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, made the announcement at a joint press conference held, last week in Abuja.
Members joined in the conference were the Minister of Power, Prof Chinedu Nebo; Governor of the Central Bank of Nigeria, CBN, Mr. Godwin Emefiele; and the Chairman of the Nigerian Electricity Regulatory Commission, NERC, Dr. Sam Amadi.
Alison-Madueke disclosed that the facility was tailored to address the three key challenges facing the power sector.
These include inadequate gas supply for power generation; misalignment between electricity tariff and the true cost of running electricity business; and the inability of generation companies to reliably produce electricity with reduced volumes of gas.
She said: “With most of the operators having just acquired PHCN successor Generation Companies, they could hardly afford the reduced income due to the shortfall in revenues for reasons that I have just set out.
“The newly privatised companies have borne the brunt of these issues and consequent shortfalls in revenue since handover last November. This is hampering the much needed investment in the sector and has slowed down efforts to improve electricity supply.
“This scenario, which existed for several years, has now given way to recent reforms by the Goodluck Jonathan administration.
And as a country, we can now address these issues with much more confidence that Nigerians will reap the dividends of increased electricity supply,” the minister said.
Outlining the scope of the intervention that the N213billion facility is designed to address, Alison-Madueke said the fund will be used to settle the legacy gas debts which stands at N36billion.
Others are the execution of agreed metering programmes; procurement of transformers by distribution companies; execution of maintenance programmes; and procurement of equipment by generation companies.
The minister further explained that the intervention fund will be provided by the CBN in collaboration with deposit money banks and will be managed by a dedicated fund manager.
Beneficiary companies are expected to repay loans obtained from the fund with a first-line charge on their revenues over a 10-year period.
“There will be a moratorium on repayment of the credit facility from the banks, by Distribution Companies until electricity supply across the country improves. This will ensure that the cost of electricity for the ordinary consumer continues to be at affordable levels,” she said.
On the modalities for operating the intervention fund, the Minister said that Distribution Companies, Generation Companies, and the Transmission Company will commit to deploy the funds to address specific challenges as preconditions for accessing the fund.