• Friday, April 12, 2024
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Power minister eyes CBN FX allocation to ramp up sector capacity

Power minister eyes CBN FX allocation to ramp up sector capacity

Amidst several challenges confronting the power sector, including limited access to critical resources, Adebayo Adelabu, the minister of power, has unveiled plans to liaise with the Central Bank of Nigeria (CBN) to prioritise foreign exchange (FX) Busines allocation to the sector in ramping up its generating capacity.

He revealed the plans during his official visit to Egbin Power Plant, where he noted that FX sourcing has been a major constraint to effective maintenance of the plant’s facility.

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Adebayo emphasised that after assessing the critical requirement for spare parts and maintenance tools, he would engage with CBN to prioritise FX allocation to the sector to enhance the industry’s capacity for electricity generation by ensuring adequate resources are available.

“It’s not only peculiar to Egbin Power Plant but also across all the generating plants. They need forex for them to be able to maintain the turbines and replace the tools and the spares, this has been a major issue, and I’m going to take a step to ensure I liaise with the foreign exchange authority in CBN to see how they can prioritise FX allocation,” he said.

Addressing the outstanding debts owed to the Generating Companies (GenCos), the minister highlighted the significant amount owed by the Federal Government, with Egbin Power Plants leading the list of creditors.

He emphasised the importance of preventing these debts from hindering the operations of the power-generating companies, noting that despite the financial challenges, Egbin Power Plant has demonstrated generosity by sustaining operations, and avoiding potential shutdowns.

Adelabu, who disclosed that the Federal Government is making the repayment of outstanding debts a priority, assured the management of Egbin Power Plant that starting from April, payments would commence as a form of incentive and encouragement to ensure their continued operation.

“Gas constraints have been an impediment to almost all the power plants and we already had a conversation with the Minister of Petroleum and we are also meeting with the gas suppliers to plead with them, have an understanding that the Federal Govt is prepared to start paying down on the debt that we owe the gas supplier companies

“We are going to make some cash injections in terms of payment, we are going to give them some guarantee debt instrument and we are also looking at a way of allowing them access to Nigeria gas wells, which would be used to defray the outstanding debt of gas suppliers. We would start seeing the impact by April when we start paying these loans, I’ve had meetings with the Minister of Finance and Minister of Budget and Planning and they have given me the promise that we are going to look for funds to start paying these debts,” he said.

Mokhtar Bounour, the chief executive officer Egbin Power Plant, identified gas availability as the primary challenge confronting the plant as insufficient supply hampers the plant’s ability to operate at full capacity, resulting in revenue losses.

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He emphasised that despite being a 40-year-old plant, significant investments have been made to ensure the safe operation of its units as failure to generate electricity would result in a significant imbalance, underlining the critical importance of maintaining operational continuity.

Bounour further highlighted that the issue of accumulated debts owed poses another challenge, as there is insufficient liquidity to sustain the plants.

“Today, we have only four units running they are not even on base load because we don’t have gas and we are receiving calls from the gas suppliers that we have some challenges, technical challenges, though they are working around the clock to get it sorted out and we hope that we can receive gas as soon as possible,” he said.