Godwin Emefiele, governor, Central Bank of Nigeria (CBN) has announced that the N213 billion Nigerian Electricity Market Stabilization Facility, meant to resolve liquidity challenges in the power supply sector, would be disbursed to the beneficiaries by deposit money banks (DMBs) from the first week of January 2015.
He disclosed this during the signing of a memorandum of understanding between the Central Bank, participating DMBs and the Nigerian Electricity Regulatory Commission (NERC).
Present at the agreement signing ceremony were the managing directors of 14 DMBs, top officials of the Nigeria Electricity Regulatory Commission, NERC led by Sam Amadi, the chairman, and other senior members of staff of the Central Bank.
Speaking at the event, which was held at the CBN headquarters in Abuja, Emefiele described the move as a bold step that would enable the banks to channel the funds towards de-risking the value chain in the electricity supply market.
He said the CBN, working with the Bankers’ Committee, had long identified that the unattractive pricing of domestic gas and anomalies in the tariff regime were some of the major challenges facing the power sector.
The facility, he said, would kick-start the electricity market in a way that will ensure improvement in the power sector.
“We are taking this bold step to now get the banks who are themselves channels through which these funds would be paid to the distribution companies and generation companies, and gas suppliers to come in and also sign their MoU at the CBN with the NERC and the CBN.
“This is clearly a bold step and it demonstrates the banking sector’s commitment to supporting government’s commitment in resolving the power problems in the country. We have identified that gas supply to the generation companies was a problem and I am happy that we took this as a challenge,” Emefiele said.
He said with the facility, all was now set for the review of the gas price to about $3:30 per millions of British Thermal Units (BTUs) from $1.5 per millions of BTU, adding that the new price would not in any way lead to an increase in domestic cost of consumption of electricity.
The CBN boss said, “In the course of our discussion, we found two major problems. One is that the tariff needed to be reviewed. That decision was taken and the gas tariff was reviewed to $2.50, whereas transportation was increased to 80 cents, thereby increasing the gas price to about $3:30, which the existing gas suppliers themselves committed to us that the price is commercially viable.
The issue of the tariff is something we have looked at and we have decided about a number of options, but I want to assure everybody that there will not be any review of tariff that will unduly affect Nigerians to the point that they won’t be able to pay.”
With the CBN-led intervention, Emefiele said the legacy debt of about N36.9 billion owed gas suppliers by the defunct Power Holding Company of Nigeria was now being settled.
The governor expressed optimism that with the settlement of the debt, the entire value chain had become clear, thus making the sector commercially viable for both existing and new investors to do business.
Amadi said the facility would help to ensure that the power sector was viable and reliable. He said with the signing of the pact, the commission would approve the new gas price, which he noted, would become effective before the end of 2014.
“We have our own commitment, which is basically to ensure cost recovery both for the CBN and for the other investors who may want to invest either in the upstream or downstream sector. Clearly, this facility will go a long way to ensure that while we continue to ensure that the tariff is cost-reflective, it will not cause a burden on consumer.

Johnson Alabi
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