Dr Sam Amadi, Chairman, Nigerian Electricity Regulatory Commission (NERC), has clarified that the N213 billion power sector intervention fund approved by the Federal government was not a bailout fund.
The Federal Government on September 23, announced a N213 billion facility to assist Electricity Distribution Companies offset legacy gas debts and address the revenue shortfall in the power sector.
Amadi, who made the clarification on Friday in Abuja in an interview said that government was not putting any money in the fund.
“No federal government money is in the fund; all the monies are coming from commercial banks through the Central Bank of Nigeria,’’ he said.
He explained that with the intervention, the banks have now taken over the debts Electricity Distributing Companies (DISCOs) owed to Generating Companies (GENCOs).
Amadi further explained that the fund was aimed at addressing inadequate gas supply for power generation and misalignment between electricity tariff and the true cost of running electricity business.
“The intervention is a sort of buy-back of debts owed GENCOs by the DISCOs,” he said.
The chairman said the fund would not be released to investors until the legal framework was put in place, adding that the disbursement of the fund would be the last process to be undertaken.
He said the intervention fund would deal with revenue shortfall without placing any burden on electricity consumers.
He said the commission would monitor beneficiaries of the fund to ensure that they are invested judiciously.
“We will monitor it by opening their envelopes and looking at the money each DISCOs received.
Amadi said that the major challenge in the power sector was lack of metering emanating from revenue shortfalls.
The beneficiary companies are expected to repay the loans obtained from the fund with a first-line charge on their revenues over a 10-year period.
(NAN)
