FG Sets Aside N40.6bn Bailout Fund for Insolvent TCN

22 Apr 2013

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Prof. Chinedu Nebo

  • Explores extra financial support to upgrade transmission network

By Chineme Okafor

Efforts to strengthen and expand Nigeria’s weak electricity transmission network would be buoyed by the federal government this year with a total bailout package of N40.6 billion, the Minister of Power, Prof. Chinedu Nebo, has said.

Nebo, who disclosed this at the weekend in Abuja, said government had initiated and obtained several bailout funds from sources that include international finance institutions to support maintenance and expansion efforts in the country’s transmission network by the Transmission Company of Nigeria (TCN) which had been adjudged bankrupt.

He stated that part of these bailout funds include a two-phased $150 million loan facility from the African Development Bank (AfDB) for maintenance and expansion of the transmission network, adding that other sources of funding were simultaneously being explored by the government.

Nebo who spoke about government’s long-term plan for the TCN, which was currently under a three-year management contract by Canadian firm, Manitoba Hydro International (MHI), admitted that the government was conscious of the deep weaknesses in the country’s transmission network, hence the various measures to remedy the situation.

“I think we need to look at it from not just that perspective because there is no doubt that cumulative decay and neglect brought together a system that is essentially very near to collapse but this has been strengthened and the government is working very hard to ensure that this is the case.

“For instance, the entire $100 million facility from the African Development Bank (AfDB) which is N15.6 billion is going into transmission without one kobo off and so I don’t think it is totally right to say that TCN is totally insolvent and neglected.

“The government realises that all these years of neglect have led to a situation where transmission which is actually supposed to be the pride of the entire sector have become the weakest link, and it is working in that direction and very soon with these interventions from government by acquiring this facility from the AfDB, we are putting all the money into transmission.
“That is not all, a lot more money is coming in and will be going into transmission too and within this year, we are not talking about something that is still far-fetched.

“Government is working hard and yes, you are right to say that it is the weakest and yet the strongest, it is supposed to be the strongest because no matter what you generate, if it is not evacuated or wheeled out to distribution companies, then of course there will be no electricity to the consumers, transmission ought to be the real giant of the entire value chain and government is still holding on it to ensure that the infrastructure is developed buoyantly enough and maybe in the future, one would also think about privatisation.”

Speaking further on the bailout plan for TCN this year, especially in the light of Manitoba’s evaluation of the finances of the company, Nebo said: “In addition to that facility, there is a huge budget which is larger than that, dedicated just to transmission alone and so a significant amount of money will be coming into the system not just to strengthen but expand the transmission network and we are working on that.

“I will say that another N25 billion will be put into transmission from the government budget this year and when you add it to the N15.6 billion and other funds that we are trying to gather to strengthen the transmission network because unless that is strengthened, we are going to have problems because if you are attracting companies to generate power and you are not wheeling this power out to distribution company, you will be losing a lot of money.”

He also gave details of the AfDB loan, saying: “It is a loan and it is $150 million, we have received $100 million and it is kept with the Accountant General of the Federation. It is all going into transmission and as we access and operate this, another $50 million will be released by the AfDB. So, we are talking of a very huge amount of money that will be invested in the transmission network alone within this year.”

Tags: Nigeria, Featured, Business, Chinedu Nebo

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