Categories: Business

FG’s N1.3tn electricity intervention offered no significant result – Minister

Minister of Finance, Budget and National Planning, Zainab Ahmed

The N1.3 trillion intervention fund provided by the Federal Government for the power sector has not yielded any significant result, Minister of Finance, Budget and National Planning, Zainab Ahmed, has declared.

The FG approved the sum of N701 billion on March 1, 2017 as power assurance guarantee funds for the Nigerian Bulk Electricity Trader (NBET) to pay for the electricity produced by the generation companies (GenCos) to the national grid for the period of two years.

The amount was provided to tackle the monthly liquidity challenges faced by GenCos, as the distribution companies (DisCos) keep defaulting in paying for the monthly invoice of electricity received.

In a letter to President Muhammadu Buhari dated November 19, 2021, the minister of finance detailed how funds could be raised through the sale of make-up gas to address the financial challenges in the sector.

“The industry requires N85 billion per month to pay for gas, generation, transmission and distribution operations,” the minister wrote.

She also stated, “Recent intervention (between 2017-2019) towards addressing the power sector problem includes the 701 billion and 600 billion payment assurance facilities (PAFs) secured from Central Bank of Nigeria (CBN) to take care of some of the FG contingent liabilities within the sector and which have not yielded significant result.

“Shortfalls caused by the large difference between allowed tariffs and what is required for cost recovery cost the FGN a total sum of N1.249 billion between 2017 and 2019. These resources are more needed for human capital development and infrastructural investment. The above includes some projects like the World Bank loan (up to $3 billion) for tariff shortfall and the euro 2.6 billion for the presidential power initiative is considered to support Nigerian Electricity Supply Industries (NESI).”

The minister also explained how Nigeria paid $137 million in two years for gas and electricity that were never used in the “take or pay deal” the country entered into with some investors in the power sector.