FG Announces N213bn Bail Out To Power Firms

The Federal Government
has announced a bail out of N213 billion for the new electricity generation companies (GENCOs) and Distribution Companies (DISCOs) to enable them provide more effective and stable power to consumers.
Announcing this  in Abuja, Friday the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, said the intervention facility which comes from the Central Bank of Nigeria (CBN) was specifically meant to address legacy gas debts of N36 billion as well as short falls in revenues to the sector since the new power firms acquired the nations Power Holding Company of Nigeria (PHCN) in November 2013.
The Minister explained that the facility would be disbursed through commercial banks and a special purpose vehicle, which would be managed by dedicated fund manager to guarantee full repayment of the funds within specific time frame of the reset tariff order.
She noted also that the  credit facility would be tied to commitments to supply specific volumes of gas-for-power, as well as commitments to negotiate and execute bankable gas supply.
As part of the agreement covering the facility, gas suppliers would ensure medium term gas supply  growth to stabilise power supply within twelve and twenty four months while the Transmission Company of Nigeria (TCN) would ensure that the minimum quantum of electricity produced by the generating companies gets to the distribution companies.
She disclosed that NERC would publish a readjusted set of tariff in line with the mult-year Tariff Order (MYTO), taking into account the CBN loan, current energy out put, baseline gas price.
The Minister said the DISCOs would be expected to use the loan to also increase their metering programmes and procure transformers expand works to rural dwellers.