The Federal Executive Council (FEC) on Wednesday approved a N701 billion payment guarantee assurance by the Central Bank of Nigeria (CBN) for power generating companies (Gencos) in Nigeria.
This is to assist the operators solve liquidity problems, which has seen them rendering poor services to consumers in parts of the country.
The Minister of Works, Power and Housing, Mr Babatunde Fashola, who briefed State House correspondents after the weekly FEC meeting, said the CBN would hold N701 billion for regular payment for power generated onto the national grid.
He said that the government’s bulk energy buyer, Nigeria Bulk Electricity Trading (NBET) had series of liquidity problems which made it difficult to fulfill its delivery obligations.
“The liquidity problems that have characterised the market have affected the Nigeria Bulk Electricity Trading (NBET’s) ability to deliver on its PPP obligations to the Gencos. So going forward in order to strengthen the NBET, CBN is providing a payment assurance guarantee for energy produced by any Genco, so that Gencos can pay their gas suppliers when they are paid so that the hydros can continue to operate.
“What we seek to achieve here is to bring some stability to the production side of the power value chain and also give confidence to investors who want to come in, who are concerned about how to recover their money.
“They see now payment assurance and also people who are planning to invest in the gas sector which is being championed by Ministry of Petroleum also are seeing the same thing in terms of payments for gas produced.
“So the approval of council was to provide this guarantee for NBET which is a 100 per cent government owned company to pay on a monthly basis its obligations, for what was actually produced onto the grid to the Gencos that are its customers.’’
Fashola said that the nation’s power transmission capacity had moved from 5,000 megawatts to 7,000 megawatts while generation had moved up from below 2,000 megawatts to 4,000 megawatts.
The minister denied that the transmission company of Nigeria (TCN) did not have the ability to take in all the energy generated, adding, that government was regularly expanding its transmission infrastructure.
But there might still be other challenges against power sector performance unless the unpaid bill of about N50 billion that government agencies are said to be owing the Gencos.
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