By; Sunday Ode, Abuja.
The Federal Government has approved N701billion as Power Assurance Guarantee for the Nigeria Bulk Electricity Trading (NBET).
The facility which will be made available by the Central Bank of Nigeria (CBN) is to guarantee the payment for the evacuation of power produced by Generating Companies (GenCos) for the national grid.
This was disclosed by the Minister of Power, Works and Housing, Babatunde Fashola after the Federal Executive Council meeting presided over by Acting President, Yemi Osinbajo at the Presidential Villa.
According to Fashola, the amount will be drawn on monthly basis tackle liquidity challenges faced by GenCos noting that part of the liquidity problem faced by GenCos is the inability to pay their gas suppliers.
He pointed out that NBET will pay GenCos in arrears of electricity generated as a deliberate step to improve their confidence and that of intending investors into the sector.
He said “The second memorandum is in another area of critical importance which is power. Part of the challenges there were addressed in the memo that was presented to council to solve some of the liquidity problems, especially as it relates to MBET.
“EMBET as you know is the government’s own company, that is the Bulk Trader Electricity who buys power from the GENCOS. The liquidity problems that have characterized the market have affected EMBET’s ability to deliver on its PPP obligations through the gencos. So, going forward in order to strengthen embet, CBN is proving a payment assurance guarantee for any energy produced by any genco, so that the gencos can pay their gas suppliers when they get paid. So that the hydros can continue to operate.
“What we seek to achieve here is to bring some stability to the production side of the power value chain and also give confidence to investors who want to come in, who are concerned about how to recover their money.payment assurance and also people who are planning to invest in the gas sector which is being championed by the ministry of petroleum also are saying the same thing in terms of payment for gas produced.
” So, the approval of council was to provide this guarantee for Embet which is a 100 percent government owned company to pay on a monthly basis it’s obligations for energy actually produced on to the grid to the gencos that are it’s customers.
Explaining further he said ;The reality is than we want more power and for that reason we are expanding our transmission capacity regularly. I have been here to announce to you transmission projects that have been approved by council and over the last one year plus the transmission capacity has grown to almost seven thousand from 5 thousand and is continuing to grow with every project.
“So, is not the problem of taking power, is actually a problem of getting power from generation. If you recall just about a few weeks ago you were reporting that power supply had dropped to a little over 2000mw. It’s back now at over 4000 mw. Because what we were seeing on the eastern side of the delta was that there power. We have solved the transmission problem in Ikot Ekpene largely to evacuate over a thousand. But the gas suppliers were being owed so they were not supplying gas for the power producers.
Fashola noted:”As to the quantum of the guarantee, it is for two years from January this year right through to December 2018. It is capped at a maximum of N701billion but it is to be drawn monthly. It is possible it may not reach that. But we are projected on the total cost that embet will likely to pay.
“And that is why it is for power generated onto the grid only. So, if the power generated does not meet that cost we don’t pay for it. It is paid in arrears at the end of the month not in advance. So, it is for actually what gets unto the grid. And This is part of the reforms that we have briefed you about that we were planning to undertake
During the briefing, the Minister of Agriculture, Audu Ogbeh, said the FEC approved the sum of N263 million for three research institutions to produce gum arabic seedlings for Nigerian farmers and for export.
He said Nigeria earned as much as $43 million from export of gum arabic last year, and that more will be earned with increased production, especially the commodity is in high demand in 17 other countries.
Ogbeh disclosed that similar efforts are on to boost Cassava production, even as he described as “interesting” the recent discovery of well-packaged ‘garri’ imported from India.