A Memorandum of Understanding was recently signed by the Central Bank of Nigeria with power firms for the provision of N213bn loan under the Nigerian Electricity Market Stabilisation Facility.
The contract which was sealed in Abuja is part of the central bank’s group effort with the Ministry of Power, Ministry of Petroleum Resources and the Nigerian Electricity Regulatory Commission to address the liquidity challenges in the power industry.
The CBN Governor, Mr. Godwin Emefiele, said the current challenges in the power reform process revolved around failure to achieve substantial increase in electricity supply.
He said, in partnership with the banking sector, the CBN will provide the necessary facility to address shortfall in power supply.
“In exchange for this intervention, we expect parties that are signing this agreement today to ensure funds are repaid as and when they become due, ensure that gas increases into the generation of power and invest the funds in necessary improvement in generation.
“This is just the beginning of this transaction and there is still a lot of work to be done.” Emefiele disclosed.
Alison-Madueke, Minister of Petroleum Resources also disclosed at the event that with the signing of the agreement, the N36bn legacy debts restraining investment in gas supply and infrastructure had been fully settled.
She said the unpleasant pricing of domestic gas, anomalies in the tariff regime and difficulties across the value chain in addressing capacity issues primarily due to a shortfall in revenues were some of the reasons for the intervention.
She said, for the last few years, the CBN, NERC, ministries of Petroleum and Power have been collaborating to develop long-lasting solutions to the challenges of gas supply.
Also, she acknowledged that she is pleased that they are present to formally consummate the gas intervention and the legacy debt of N36.9bn owed to gas suppliers by the power sector — PHCN over the last few years is now being settled through the CBN-led intervention scheme. And with the intervention, all undisputed claims are therefore settled.
Henceforth, proper security mechanism would be put in place to ensure that gas owed to private sector would be paid up, adding that it would help to produce a feasible gas sector for the country, Madueke said.
She said the CBN intervention would bring about over two billion cubic feet of gas between now and 2017, noting that about 80 per cent of the gas would be going to the power sector and support additional five to six gigawatts of electricity.