CBN seeks early disbursement of N196bn power support fund

The Central Bank of Nigeria (CBN) is working to resolve issues holding back the full disbursement of its N200 billion credit support fund for the power sector by the end of this month, BusinessDay has learnt.

The disbursement of the fund was suspended after the perceived politically motivated tariff reduction announced by the electricity regulator, NERC on February 24 last year and there is about N160bn waiting to be disbursed.

The tariff reduction meant that forecasts made by the apex bank for the repayment of the credit had become irrelevant. There were also issues around the obligations of players involved in embedded power generation.

Godwin Emefiele, Central Bank governor, told BusinessDay yesterday, that there was a good chance that the disbursements can commence by the end of this month.

“We are making steady progress”, he said. “with the announcement of a new and viable tariff regime, we believe we can get the disbursement programme back on track by the end of the month.”

The fund was originally meant to benefit about 41 players in the emerging private sector led electricity sector and it is expected that the fund, once received, will be reinvested by the power distribution and generation companies, as well as gas suppliers, to ramp up the amount of power in the system.

The 2013 power privatisation was pursued with haste by its supporters who feared that a slow down could result in the programme being swept away by the tide of electioneering, ahead of last year’s ground breaking elections.

This left some concerns with the prospective buyers of the assets who could not conduct the rigorous due diligence required for the size of transactions anticipated.

One such area of concern was the lack of credible data on losses suffered, which was a major pillar adopted for the privatisation of the various distribution assets.

Funke Osibodu, managing director and chief executive  officer of Benin Electricity Distribution Company said  the  loan has been largely misread by some sections of the public, and  was meant to help bridge the funding gap created by the lack of payment of reflective tariff by customers of the electricity  companies.

The intervention fund from the Central Bank was meant to be used to pay gas suppliers and generation companies so that more electricity can be generated.

It would help the distribution companies to upgrade their networks.

Sunday Oduntan, executive director of the Association of  Electricity Distributors (ANED) said the disbursement of the  fund would help the industry a great deal, as it will bridge the fund gaps even  though it would not completely solve the problem. “ It would be a good starting  point for the operators, as this would help them  in terms of capital expenditure”

Oduntan said already, about N65 billion has been released to some of the companies and it would be appreciated if the   CBN expedite  action  in releasing the remaining  fund.

Olusola Bello