Nigerian power sector would have collapsed without CBN’s intervention – Experts

Stakeholders have expressed concerns over the continuous dependency of the power sector on the Central Bank of Nigeria (CBN) seven years after the sector was handed over to the private investors.

The experts who insisted that the sector would have collapsed without loans and interventions by the apex bank noted that it was high time for the sector to stand on its own.

Recall that the CBN had launched the Power and Aviation Intervention Fund (PAIF), hovering at about N300 billion, Nigerian Electricity Market Stabilisation Facility (NEMSF) at about N213 billion, N140 billion Solar Connection Intervention Facility, over N600 billion tariff shortfall intervention as well as a recent N120 billion intervention designed for mass metering among others.

The Federal Government had similarly released N600 billion for the power sector to bridge shortfall in the payment of monthly invoices by key stakeholders in the sector with another N701 billion CBN facility deployed in March 2017 as Power Assurance Guarantee.

Earlier this year, The Central Bank of Nigeria (CBN) says it has disbursed over N1.3 trillion to support power supply to Nigerians in the last five years.

Godwin Emefiele, the CBN Governor, while speaking at a news conference following a meeting of the Bankers Committee in Abuja said: “So, what we are trying to say here is that the CBN has always been there to support the power sector. Like you all know, we have disbursed over N1.3 trillion in the last five years to support through the Generators or Discos or to acquire equipment or to buy meters or to improve what is being paid to electricity generating companies; so that they can continue to pay for their gas and then the system can continue to operate.’’

Wunmi Iledare, an energy expert, had earlier noted that interventions by the CBN as a repayable loan was understandable, but added that the current structure of the electricity market in the country could mar the interventions.

Stephen Kanabe, economic analyst, had similarly told reporters the intervention by apex bank in the distribution segment of the nation’s power sector, especially metering, would contribute to significantly reducing the lingering challenges of poor infrastructure and arbitrary billing of end-users.

Habeeb Jaiyeola, associate director, Energy, Utilities and Resources at PricewaterhouseCoopers (PwC), has insisted that providing financial support to industries, especially the power sector, remained a welcome development.

Although, Jaiyeola noted that the need to ensure that the facilities are duly paid back, he said government’s continued support to power sector will have an overall impact on the sector to facilitate the required progress, adding that the Federal Government also has equity ownership in the DisCos.

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He urged the authorities to clearly outline and monitor the interventions to ensure it achieved projected objectives, adding that the National Mass Metering Programme for instance may need to be checked against some of its set objectives in terms of coverage, availability, and completion time.

“An assessment of the impact of intervention funding in the power sector also needs to be looked into. While government intervention continues to be an important sector catalyst, monitoring impact will ensure government scarce resources are appropriately channeled for the benefit of Nigerians,” he stated.

According to him, infrastructure funds are used the world over for the development of critical infrastructure which guarantees constant returns on investment for investors, adding that a critical element of the success of these funds is adequate planning and strategic contracting.

“The world over, Government interventions are used to catalyse economic development. In many cases government interventions are quite critical in controlling the cost of borrowing in developing sectors. The CBN intervention remains a positive tool for the development of the domestic gas sector. However, the payback has to be enforced to ensure the fund remains available for further critical interventions,” Jaiyeola stated.

He stated that to achieve sustainable growth, interventions alone cannot be the solution, adding that an appropriate pricing system needs to be instituted to enable the forces of demand and supply determine price and enable adequate returns on investment.