Power firms got N18.26bn Loan

The Central Bank of Nigeria, in a bid to resolve the liquidity challenges in the power sector, on Monday released N18.26bn as loan to five power firms.

 

The loan, which was given at an interest rate of 10 per cent, with a repayment period of 10 years, was part of the N213bn Nigerian Electricity Market Stabilisation Facility.

The three benefitting power generation and two distribution companies had their respective chief executive officers in attendance during the commencement of the disbursement of the loan.

The Ibadan Electricity Distribution Plc received the highest amount of N11.36bn; while the Eko Electricity Distribution Plc followed with N5.16bn.

For the generation companies, Jebba Hydroelectric Plc received the highest amount of N816.83m; while Kainji Hydroelectric Plc and Shiroro Hydroelectric Plc got N678.85m and N234.81m, respectively.

The disbursement of the loan is a-follow up to the Memorandum of Understanding, which was signed last December by the CBN, the participating Deposit Money Banks and the Nigerian Electricity Regulatory Commission.

The agreement was to facilitate the channeling of funds to the firms in order to de-risk the value chain in the electricity supply market.

Speaking at the loan disbursement ceremony, which was held at the central bank headquarters in Abuja, the CBN Governor, Mr. Godwin Emefiele, described the facility as a major initiative to reset the economics of the power sector.

He urged the firms to utilise the funds to upgrade their infrastructure and warned them against diverting the loans to other operational activities not contained in the agreement.

Emefiele said, “To those who are receiving the funds in line with the transaction structure, we appeal to you that the funds be used for the purpose which they are meant for. In partnership with the banking sector, the CBN is providing this facility to address recent shortfalls in power sector revenues caused by needed adjustments in the electricity tariff and legacy gas debts.

“The facility will be paid back over the lifetime of a reset electricity tariff. In exchange for this intervention, we fully expect the parties that are collecting these funds today to ensure that the funds are repaid as and when due; and ensure that all inputs into the generation of power are ramped up in a consistent manner

“They are to also invest the funds in the necessary improvements in generation, plant maintenance, transmission upgrade and distribution networks, including transformers and better metering for end consumers.”

He congratulated the five firms for being the first set of power companies that met all the requirements to receive the funds.

He called on others to learn from the five companies and follow the rules as soon as possible so that the CBN could disburse their tranches of the facility.

The Minister of Power, Prof. Chinedu Nebo, described the disbursement as a major step that would help unlock the power sector.

He said, “This is not a grant by any means; this is something that needed to happen. It needed to happen because of miscalculations of entering a market without what you could call a robust tariff structure; struggling with all kinds of technical, commercial and collection losses beyond what was originally conceived.

“And then, finding a way to address this in a creative, responsible and sustainable manner to make sure that we come out of the rot and have a robust power sector.”

The Chairman, IEDC, Mr. Tunde Ayeni, who spoke on behalf of the recipients of the loan, assured the CBN governor that the fund would be judiciously utilised to boost power supply.

He said going forward, Nigerians would begin to see a remarkable improvement in power distribution owing to the massive investments that would be made.

by Ifeanyi Onuba