By Lawrence Olaoye
The Federal Government yesterday approved the sum of N213 billion as an intervention fund for electricity companies.
This was disclosed by the Minister of Petroleum Resources, Mrs. Diezani Allison-Madueke while briefing state House Correspondent on update of government efforts towards improving the gas to power and electricity supply projects in the country.
The minister also gave the assurance that the lingering fuel scarcity brought about by the striking oil workers would soon come to an end.
The minister who was joined by his Power counterpart, Professor Chinedu Nebo, the CBN Governor, Godwin Emefiele, and the Chairman of Nigeria Electricity Regulatory Commission (NERC), Dr. Sam Amadi, said amount to be released by the apex bank would be used to settle legacy gas debt and shortfall in revenue in the sector.
According to her, there has been a hanging debt of about N36 since the handover of PHCN companies in November 2013 to private investors.
Diezani explained that in order to give confidence to gas suppliers and investors, government has also directed that the NERC publishes a reset tariff order (MYTO 2.1).
This is expected to take into account CBN’s 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.
She added that the benefitting companies of the facility would repay it with a first line charge on their revenue over a ten year period.
The minister said “There will be a moratorium of repayment of the credit facility from banks by distribution companies until electricity supply across the country improved. This will ensure that the cost of electricity for ordinary consumers continues to be at affordable levels.
The CBN will, on a case-by-case basis, be working with the deposit money banks on sum of the prudential guidelines associated with acquisition loans for electricity assets through extended restructure if the debts payments during the moratorium period. This will also apply where it is clear that strains on loans are a direct result of recent, unforeseen adjustments in the policies that guide electricity market.”
Diezani also said that the credit facility would be disbursed through commercial banks and a special purpose vehicle which would managed by a dedicated fund manager.
She said “ the structure would ensure that the funds are repaid in full within the time frame of the reset tariff order.
With this intervention, government gave conditions which it said would stabilize the market and boost electricity supply.
“The Transmission Company of Nigeria (TCN) which is operated by a private management contractor will also sign commitments to ensure that a minimum quantum of electricity that is produced by the generation companies reaches the distribution companies.
Gas suppliers in turn, will sigh a commitment to assure medium term gas supply growth, that stabilizes all privatized PHCN and NDPHCN power plants within 12-24 months,” she said.
The Minister however maintained that NERC and the CBN are working on regulations to ensure that electricity customers, lenders and other utilities are protected in the event that the electricity companies fail.
“This is because these companies are essentially either regional,monopolies (the Distribution Companies), or operate on a “must-run” basis (the generation companies.
With the intervention, the petroleum minister the hope that the power output will stabilize at 5000mw and surpass the short term target early next year.