FG Okays N701b for Electricity Generation

By Dipo Olowookere

The sum of N701billion has been approved by the Federal Government as Power Assurance Guarantee for the Nigeria Bulk Electricity Trading (NBET).

Minister of Power, Works and Housing, Mr Babatunde Fashola, made this known yesterday after the weekly Federal Executive Council (FEC) meeting chaired by the Acting President, Prof Yemi Osinbajo.

He told newsmen that the facility would be made available by the Central Bank of Nigeria (CBN) and it is to guarantee payment for the evacuation of electricity produced by Generation Companies (GenCos) to the national grid.

Mr Fashola noted that during the meeting on Wednesday, ways to solve the power crisis in the country were discussed.

“NBET, as you know, is the government’s own company. That is the bulk electricity trader who buys power from the Gencos.

“The liquidity problems that have characterised the market have affected NBET’s ability to deliver on its PPP obligations through the Gencos.

“So, going forward in order to strengthen NBET, CBN is proving a payment assurance guarantee for any energy produced by any Gencos, so that the Gencos can pay their gas suppliers when they get 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.

“Payment assurance and also people who are planning to invest in the gas sector which is being championed by the ministry of petroleum also are saying the same thing in terms of payment for gas produced,” he said.

Mr Fashola pointed out that the amount would be drawn on a monthly basis to tackle the liquidity challenges faced by Gencos, adding that NBET would pay Gencos in arrears of electricity generated as a deliberate step to improve their confidence and that of intending investors in the sector.

The Minister said the quantum of the guarantee was for two years from January this year right through to December 2018.

“It is capped at a maximum of N701billion but it is to be drawn monthly. It is possible it may not reach that. But we are projected on the total cost that NBET will likely to pay,” he added.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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