FG provides N213bn facility to boost power generation

The inter-agency initiative of the Federal Government aimed
at ensuring efficient gas supply for power generation and
finding a lasting solution to power supply challenges has
announced a N213bn facility to help offset the legacy gas
debts and address the revenue shortfall in the power sector.

The Minister of Petroleum Resources, Mrs. Diezani Alison-
Madueke, who made the announcement at a joint press
conference held by 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; disclosed
that the facility was tailored to address the three key
challenges facing the power sector..
Mrs. Alison-Madueke listed the three key issues plaguing the
power sector as identified by the inter-agency committee to
include inadequate gas supply for power generation;
misalignment between electricity tariff and the true cost of
running electricity business; and the inability of power
generation companies to reliably produce the electricity that
is possible with reduced volumes of gas.
"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 revenue shortfalls in revenue,
since handover last November. This is hampering 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
stated.
Outlining the scope of the intervention that the N213bn
facility is designed to address, Mrs. Alison-Madueke said the
fund will be used to settle the legacy gas debts which stands
at N36bn; execution of agreed metering programmes and
procurement of transformers by distribution companies; and
execution of maintenance programmes and procurement of
equipment by generation companies.
The intervention fund which, according to the Minister, will be
provided by the CBN in collaboration with deposit money
banks, will be managed by a dedicated fund manager and
beneficiary companies will 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 ordinary consumers continues to
be at affordable levels", she announced.
Speaking further on the modalities for the operation of the
intervention fund, the Minister said that Distribution
Companies, Generation Companies and the Transmission
Company will give commitments to deploy the funds to
address specific challenges as preconditions for accessing the
fund.
"They will also have to meet commitment to rapidly expand
their networks. This will ensure that more Nigerians,
especially in rural areas of the country, have access to
electricity," she stated.
She expressed optimism that the new measures introduced
by the inter-agency committee "will reset the economics of
the electric power sector, boost investor confidence and lead
to a rapid increase in electricity supply. We envisage
stabilising output of power at 5000MW and indeed
surpassing this short-term target early in 2015".

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