FG Okays N213bn Intervention Fund to Stabilise Power Supply
The Federal Government on Friday announced an intervention fund of N213 billion for private electricity companies.
The decision to release the fund was informed by the need to stabilize output at 5,000 mw by the end of the year, Minister of Petroleum Resources, Mrs Deziani Alison-Madueke, told a news conference in Abuja.
According to her, the Central Bank of Nigeria (CBN) in collaboration with the deposit money banks would provide a total of N213 billion to settle both legacy gas debts as well as the shortfall in revenue to the sector since the handover of PHCN companies to private companies on November 1, last year.
The minister explained further that the credit facility would be disbursed through commercial banks and a special purpose vehicle, which would be managed by a dedicated fund manager.
She added that the structure would ensure that the funds are repaid in full with the time frame of the reset tariff order.
Also, she assured that the private electricity companies would repay the credit facility with a first line charge on their revenue, over a 10-year period
Alison-Madueke explained that there would be a moratorium on repayment of the credit facility from banks, by distribution companies until electricity supply across the country improves, stressing that it would ensure that the cost of electricity for ordinary consumers continues to be at affordable levels.
Flanked by the Minister of Power, Prof Chinedu Nebo, Governor of Centyral Bank of Nigerian (CBN), Godwin Emefiele and the NERC Boss, Dr.Sam Amadi, Alison-Madueke, said a total of N36 billion would be provided for the settlement of legacy debts for gas supplied to power plants.
According to her, the N36 billion would be tied to commitments to supply specified volumes of gas- for -power as well as commitments to negotiate and execute bankable gas supply agreements with power plants.
She spoke further, “the Central Bank of Nigeria (CBN) representing the deposit money banks, also promised to facilitate the settlement of legacy debts for gas supplied to power plants. This gives further confidence to gas suppliers/investors.
“It is important that with this intervention, which is now established to be N36 billion will be tied to commitments to supply specified volumes of gas- for-power as well as commitments to negotiate and execute bankable gas supply agreements with power plants”, she said
She assured that the Nigerian Electricity Regulatory Commission (NERC) would publish a reset tariff order, stressing that the 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 business.
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