20 January 2017, Abuja – The request for an intervention by the Federal Government in addressing the N1tn shortfall in the electricity industry’s revenue will not be granted as the Minister of Power, Works and Housing, Babatunde Fashola, has stated that the government will not provide monetary assistance to operators in the power sector.
The minister also stated that the Federal Government would not reverse the privatisation of the power sector, despite several calls for a reversal or review of the exercise following the poor performances of the various privatised electricity generation and distribution firms.
The liquidity problem in the power sector has been described as a major challenge inhibiting the optimum performance of operators in the industry.
The Chief Executive Officer, Association of Nigerian Electricity Distributors, Mr. Azu Obiaya; President, Nigeria Gas Association, Mr. Dada Thomas, and other senior industry players had told our correspondent in separate interviews that the financial shortfall in the power sector was about N1tn.
They urged the government to intervene either by providing subsidy or by coming up with workable measures to address the financial challenge.
But speaking on Wednesday night at the January 2017 edition of the monthly Nextier Power Dialogue in Abuja, Fashola explained that the government considered the N213bn Nigeria Electricity Market Stabilisation Fund provided by the Central Bank of Nigeria as enough subsidy for the sector.
He stated that the NEMSF was a low-interest loan, which operators who were comfortable with its terms, had accessed and used to upgrade their assets and services.
The minister noted that he was unsure about the repeated request by some operators in the market for government subsidy.
“Subsidy appears in different forms. When I resumed in this sector, I was made to understand there was an existing CBN fund for the market. The CBN fund comes at a low interest rate; if that does not qualify as subsidy, then I don’t know what else qualifies,” Fashola said.
According to him, the Federal Government is more interested in addressing the governance issues of the market, which are man-made challenges that can be fixed.
The NEMSF was disbursed to three power distribution companies; 14 generation firms, including the National Independent Power Plants; one service provider and six gas companies to address their financial challenges.
On the calls for a review of the privatisation exercise, the minister said the government was firm on keeping with the terms of the privatisation.
He also stated that Nigerians would have to come to terms with the realities of regular tariff reviews, which is one of the features of a privatised electricity industry.
Fashola said, “Tariff review is part of the realities of privatisation. One of the prices of privatised power is that subsidies are hard to get and tariffs have to come. Tariff reviews are continuing developments in the sector because inputs change.”