FG bails out power companies with N213b

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The Federal Government has approved N213 billion facility to rescue private operators in the electricity market towards boosting electricity supply in the country.
This is even as the Nigerian Electric­ity Regulatory Commission (NERC) is set to review electricity tarrif in the country.


The Minister of Petroleum Re­sources, Diezani Alison-Madueke, told State House correspondents at the Presidential Villa, Abuja, that Ni­geria’s electricity supply has been characterised by three problems in­cluding inadequate gas for power sup­ply, misalignment between the tariff and the true cost of running electricity businesses, and inability of genera­tion companies to reliably produce the electricity that is possible with reduced volumes of gas.
Alison-Madueke who briefed on ‘electricity market stabilisation facility and the bankability of the power sec­tor’ alongside, the Minister of Power, Chinedu Nebo, Central Bank of Nige­ria (CBN) Governor, Godwin Emefu­ele, and Chairman, Nigerian Electric­ity Regulatory Commission (NERC), Sam Amadi, added that the problems have resulted in revenue shortfalls for the new private companies and slowed down improvement in electricity sup­ply.
“The CBN, in collaboration with the Deposit Money Banks, will pro­vide a total facility of N213 billion to settle both the legacy gas debts as announced on August 2 and also the shortfall in revenues to the sector since the handover of PHCN companies on November 1, 2013.”
She added that N36 billion would be tied to commitments to supply specific volumes of gas-for-power and to ne­gotiate and execute bankable gas sup­ply agreements with power plants.
“NERC will publish a reset tariff order (MYTO 2.1). This tariff order will take into account the CBN pro­vided facility, current levels of energy output, the new baseline gas price and other variables that more closely re­flect the true cost of running electricity businesses.”
The electricity market, which she stressed is mainly consisting of private operators, will repay the facility with a first-line charge on their revenues over a 10-year period.
The Petroleum Minister also said that there would be a moratorium on repayment of the credit facility by the distribution companies until electricity supply improves across the country.
This, she said, will ensure that the cost of electricity for ordinary con­sumers continues to be at affordable levels.
The minister added: “The CBN will, on a case-by case basis, be work­ing with the Deposit Money banks on some of the prudential guidelines associated with acquisition loans for electricity assets through extended re­structure of the debts repayment dur­ing the moratorium period.”
“This will only apply where it is clear that strains on loans are a direct result of recent, unforeseen adjust­ments in the policies that guide the electricity market.”