Thursday, 2 March 2017

FG Approves N701 Billion to Boost Power Generation

The Minister of Power, Works and Housing, Babatunde Fashola on Wednesday while briefing state house correspondents after the Federal Executive Council (FEC) meeting, said the federal government has approved the sum of N701billion as Power Assurance Guarantee for the Nigeria Bulk Electricity Trading (NBET).

This, according to him, is to guarantee payment for the evacuation of electricity produced by Generation Companies (GenCos) to the national grid.

The minister said the amount would be drawn on a monthly basis to tackle the liquidity challenges faced by Gencos, noting that part of the liquidity problem faced by GenCos was the inability to pay their gas suppliers.

He pointed out 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.

He said: “The second memorandum is in another area of critical importance which is power. Part of the challenges that were addressed in the memo that was presented to council to solve some of the liquidity problems, especially as it relates to NBET.

“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 the approval given by FEC was to provide this guarantee for NBET which according to him, was a one hundred per cent government-owned company to pay on a monthly basis its obligations for energy actually produced on to the grid to the Gencos that were its customers.

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