Chineme Okafor in Abuja
The Nigerian Bulk Electricity Trading Plc (NBET) will have up to 10 years to repay the N701billion financial facility obtained from the Central Bank of Nigeria (CBN) to guarantee payments for electricity generated by the generation companies (Gencos) for the next two years, a federal government memo has disclosed.
The memo, which THISDAY obtained in Abuja was earlier presented to the Federal Executive Council (FEC) in February 2017, by the Minister of Power, Works and Housing, Mr. Babatunde Fashola, for consideration and approval of proposed policy interventions to revive the country’s troubled power sector.
It contains the policy measures, which the government had outlined to reposition the sector, including the Power Sector Recovery Plan initiated in partnership with the World Bank wherein the Bank is expected to commit up to $2.519 billion for measures aimed at resetting and reforming the sector.
Statutorily, the NBET will, within the transitional stage of the electricity market, buy power from Gencos and independent power plants, and sell to electricity distribution companies, using legal instruments, which include power purchase agreements (PPAs) and vesting contracts.
NBET recently got a N701 billion from the CBN to guarantee Gencos’ payments for gas supplied to them.
THISDAY however reported earlier that the payments would be made directly to gas suppliers upon Gencos presentation of their gas invoices to NBET.
But providing further details on the workings of the N701 billion, the government memo stated that the NBET would have a period of 10 years to repay the loan.
It added that it would however continue to collect an average of 25 per cent of its invoice from the Discos throughout 2017, and thereafter gradually increase it over the course of 2018 to possibly 80 per cent.
“NBET enters into an agreement to borrow from the CBN through the Ministry of Finance the sum of up to N701, 936,483,451, only for disbursement over a two-year period and repayable over a 10-year period for the purpose of implementing the payment assurance program that guarantees energy payments for all electricity generation and gas supply companies on the national grid,” said the memo.
The memo also identified the other policy interventions the government was considering for the sector to include a centralised payment of the monthly electricity debts of its Ministries, Departments and Agencies (MDAs) to avoid instances of debts accrual; direct payment of existing MDAs debts to upstream market participants; and simplified tariff methodology by the Nigerian Electricity Regulatory Commission (NERC) to ensure the sector operates cost reflective tariffs.
It added thus that there will be a: “Directive to Ministry of Finance, Debt Management Office and CBN to pay off post February 1, 2015 MDA debts after verification and audit, either by direct payment to upstream market participants or a discountable payment financial instrument”.
“Directive to Ministry of Power, Works and Housing, Ministry of Finance, CBN and Discos to establish a centralised payment scheme for FGN MDAs after a rigorous audit of their energy consumption, meters, billing processes and debts. Policy directive to NERC to implement, over time, a simplified tariff methodology and order that more accurately reflects market realities, exchange rate realities, and the cost of producing and delivering the product, and with less consumer resistance through wider consultation,” the memo added.