N702 billion payment guarantee fund, others won’t produce overnight electricity, says Fashola

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Minister of Power, Works and Housing, Mr. Babatunde Fashola, has said that decisions so far taken as part of reform programmes in the power sector cannot alone solve all the problems and produce steady electricity nationwide.

Recent decisions taken by the Federal Government include the inauguration of commissioners for the Nigerian Electricity Regulatory Commission (NERC) and the approval of N702 billion to the Nigerian Bulk Electricity Trading (NBET) to guarantee the payment of its obligations.

Fashola, speaking on ‘Power sector payment assurance program for power Generation Companies (GENCOs),’ yesterday said: “These plans alone will not solve all the problems of the power sector or produce overnight the electricity that has eluded us for decades. 
He lamented that the power Distribution Companies (DisCos) have not improved customer services at the pace government and the country expected, saying they do not pay fully for the electricity they receive from the Generating Companied (GenCos) through NBET. 

He attributed some of the reasons to regulatory and tariff inconsistencies of the past administrations, unexpected changes in the foreign exchange market and lower than expected generation due largely to pipeline vandalisation.

The minister observed that much of the failure related to the DisCos’ inadequate financial and technical capacity and some sharp practices in their administration of collections from customers.
He said as a result, the money NBET collects monthly from the DisCos is not enough to pay NBET’s contractual obligation to the GenCos.Fashola stated that in recent months, the payment by the DisCos to NBET was as low as 17 per cent of NBET’s invoice, just as in January this year, it was 24.9 per cent, while the GenCos in turn do not pay their gas suppliers, equipment suppliers, banks and other partners what they are contractually bound to pay. 

He further said the DisCos do not pay Transmission Company of Nigeria (TCN) what is contractually due to it for transmitting the energy the DisCos sell to consumers, resulting in payment shortfalls, while the accumulated debts are increasingly threatening the electricity supply system.  

This, he noted, is apart from undermining the growth of the economy and the electricity sector by discouraging new investors from building new power stations and transmission facilities.

Explaining that the N702 billion payment guarantee support to NBET was effective from January this year, he said subsequent government interventions would be, among other things, to ensure that all industry revenues are fairly distributed to all market participants and their suppliers according to contractual commitments.

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Babatunde Fashola
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