With N701bn boost from the Federal Government, power-generating companies, GENCOS are set to overcome liquidity problems and increase power generation for Nigerian homes and businesses.
Emerging from the Federal Executive Council (FEC) yesterday, the Minister of Works, Power and Housing, Mr Babatunde Fashola, announced this development to State House Correspondents, that the CBN would hold N701 billion for regular payment for power generated onto the national grid.
He said: “The liquidity problems that have characterized 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 the 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 who added 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, said the N701bn will last till 2018 and would be drawn by the Gencos on a monthly basis.
He said: “As to the quantum of the guarantee, it is for two years from January this year through Dec. 2018. It is capped at a maximum of N701 billion but it is to be drawn monthly.
“That is the cap, it is possible it will not reach that but we have projected on the total cost that NBET is likely to pay and that is for power generated on the grid only,’’