NEMSF: CBN disburses funds to Gas Suppliers
In continuation of funds disbursement to the beneficiaries of the N 213 Billion Nigeria Electricity Market Stabilization Facility (NEMSF), as part of its effort to boost power supply in the country, the Central Bank of Nigeria (CBN), on Friday, June 12, 2015, disbursed a total of N6.9 billion to gas suppliers; representing legacy debts owed them by power distribution companies (DISCOs).
Welcoming beneficiaries to the ceremony held at the Bank’s Head office in Abuja, the CBN Governor, Mr. Godwin Emefiele, CON, disclosed that the payments made by the Bank represented debts by the power sector in proportion to the obligations to repay the facility by five DISCOs that have so far signed up to the facility. The DISCOs involved are Eko, Ibadan, Kano, Port Harcourt and Enugu.
Describing the disbursement to the gas suppliers as a milestone that had to be achieved, Emefiele said the move was an important step in revitalizing Nigeria’s energy sector. According to him, what the CBN, in partnership with the banking sector, had done was to ensure the commercial viability of gas. He said this was particularly so given that the gas sector had little incentive to make the necessary investments in gas exploration and infrastructure to keep up with the growth in power generation.
Continuing, the CBN Governor recalled that the Nigeria Electricity Regulatory Commission (NERC), in August 2014, approved a commercially viable benchmark price of $2.50/mcf (one thousand cubic feet) for gas supply, and 80 cents/mcf as transportation costs for new capacity, in order to encourage existing and prospective gas suppliers ramp up their investments.
While appreciating the gas suppliers, Mr. Emefiele urged them to endeavor to complete the process of activating formal, binding agreements for gas volumes to power sector companies as well as deliver more of their existing gas output to existing power plant. The governor further encouraged them to make necessary investments to ensure that gas keeps pace with the development of new gas-fired power plants and the expansion of existing plants.
Emphasizing that the CBN ordinarily had no business in the power chain, he disclosed that the Bank and the banking sector had to intervene owing to the shortfall shortfalls in power sector revenues caused by needed adjustments in the electricity tariff and legacy gas debts. He therefore admonished the gas suppliers to see the move by the banking sector as a clear sign of the Federal Government’s commitment to change the course of both the domestic gas sector and the power sector.
“Nigerians need power; let us cooperate and do our bit to ensure that Nigerians have power,” he urged the suppliers.
In his remarks, the representative of the Chairman, Nigerian Electricity Regulatory Commission (NERC), and Commissioner in charge of Market Competitions and Rates at the Commission, Mr. Patrick Umeh, commended the CBN and the Ministries of Power and Petroleum for the collaboration to improve the power sector.
Highpoint of the event was the presentation of symbolic cheques to the beneficiaries for sums ranging from N230 million to N2.04 billion.
Speaking on behalf of the gas suppliers, Supo Sadia of the NNPC/Chevron Joint Venture expressed gratitude to the Federal Government, the CBN and the Banking sector as well as the Ministries of Petroleum and Power and the regulators for the payment made. He expressed the commitment and desire of the gas suppliers to partner with the Government in ensuring adequate power supply in the country.
Also present at the event was the Deputy Governor (Economic Policy), Dr. (Mrs.) Sarah Alade, some Departmental Directors, and Advisers.