Saturday, 20 September 2014

Power: FG bails out private companies with N213bn

The Federal Government yesterday approved N213 billion
lifeline for private operators in the electricity market towards
boosting electricity supply in the country.

The Minister of Petroleum Resources, Diezani Alison-
Madueke, disclosed this to State House correspondents at the
Presidential Villa, Abuja yesterday.
She was accompanied to the briefing on 'Electricity market
stabilization facility and the bankability of the power sector'
by the Minister of Power, Chinedu Nebo; Central Bank of
Nigeria (CBN) Governor, Godwin Emefuele, and Chairman
Nigerian Electricity Regulatory Commission (NERC), Sam
The Petroleum Minister noted that Nigeria's electricity supply
has been bedeviled by inadequate gas for power supply,
misalignment between the tariff and the true cost of running
electricity businesses, and the inability of generation
companies to reliably produce the electricity that is possible
with reduced volumes of gas.
According to her, the problems have resulted in revenue
shortfalls for the new private companies and slowed down
improvement in electricity supply.
She said: "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 2nd and
also the shortfall in revenues to the sector since the handover
of PHCN companies on November 1st, 2013."
The sum of N36 billion, she said, 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.
She said: "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."
According to her, the electricity market, mainly consisting of
private operators, will repay the facility with a first-line
charge on their revenues over a 10-year period.
She also said that there will 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, unforseen adjustments in the policies
that guide the electricity market.
"The credit facility will be disbursed via commercial banks
and a special purpose vehicle, which will be managed by a
dedicated fund manager. This structure will ensure that the
funds are repaid in full, within the time frame of the reset
tariff order."
Speaking on the fuel scarcity in the country, she said: "I have
just come out from meetings with the unions and I do believe
that we have come to a fruitful conclusion. The lockdown will
no longer exist after this time."
Nebo said that the government is not just doing the bailout
but doing what is expected of it to stabilise the market.
"By the end of the year, we should be doing 5,000
megawatts," he added
According to him, Nigeria is fighting a real war concerning
vandalization of pipelines in the country.
Sent from my BlackBerry wireless device from MTN

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