All is now set for the nation’s electricity market to takeoff following the disbursement agreements of the N213 billion Central Bank of Nigeria (CBN)’s intervention fund signed yesterday by the stakeholders.
Recall, Federal Government announced the N213-billion facility in September this year to help offset the legacy gas debts and address the revenue shortfall in the power sector.
The intervention fund is expected to be repaid over a period of 10 years at a 10 per cent interest rate per annum.
Present at the venue of the signing of the agreements were, the ministers of petroleum resources, Mrs Diezani Alison-Madueke, the minister of power, Prof. Chinedu Nebo, the CBN’s Governor, Godwin Emefiele, the Chairman of the Nigerian Electricity Regulatory Commission (NERC), chief executives of major oil companies and power generation and distribution firms respectively.
Speaking, the minister of petroleum resources, Alison-Madueke said, “Let me add that today’s intervention is also complimented by a reciprocal commitment by the gas suppliers. A medium term gas supply from the various gas suppliers is being made today. Today’s commitment will bring to the grid an additional 2.5 billion cubic feet per day of gas over the period from now till 2017.
“Over 80 per cent of that will go to the power sector supporting an additional five to six gigawatt relative to today’s capacity….with these projects the target of 5000mw by the end of December will be met,” she said.
Also speaking, the CBN’s Governor, Emefiele stated that in order to resolve the sectors liquidity challenge, CBN is providing the facility aimed at settling legacy debts and shortfalls in revenue during the interim period and guarantee the take-off of the Transitional Electricity Market (TEM).
Emefiele disclosed that FBN Capital has been appointed by the CBN as transaction advisor, while Meristem securities and Detail Solicitors and Stream Sowers & Kohn (SSK) have been appointed fund manager and legal team respectively.
According to him, the facilities will be administered through deposit money banks, while a special purpose vehicle that complies with the section 31 of CBN Act 2007 will serve as an intermediary between the banks and the electricity market players.
“NERC shall reset the Multi-Year Tariff Order (MYTO) to ensure that it provides for the loan repayment including the costs of setting up and operating the Nigerian Electricity Market Stabilisation Facility (NEMSF),” Emefiele said.
He added that other players in the value chain must commit to gas supply at higher volumes, while Gencos and Discos would commit to utilizing the funds for equipment acquisition, refurbishment and upgrade.
Others at the event are: Total, Shell, Seplat, Chevron, the Nigeria Gas Company (NGC), the Niger delta Power Holding Company (NDPHC) as well as the 11 distribution and some generation companies.