CBN Disburses N6.9b To Gas Supplier | Independent Newspapers Limited
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CBN Disburses N6.9b To Gas Supplier

Posted: Jun 15, 2015 at 12:02 am   /   by   /   comments (0)

By Akinwunmi King , Lagos

The Central Bank of Nigeria (CBN), has paid the sum of N6.9 billion to gas suppliers as part of its Nigerian Electricity Market Stabilisation Fund (NEMSF), which is set aside to ensure a steady power supply to the country.

Godwin Emefiele ,CBN Governor

Godwin Emefiele ,CBN Governor

The amount is representing legacy debts owed the gas suppliers by power distribution companies (DISCOs).

The CBN Governor, Godwin Emefiele, at an Abuja event to disburse the cheque, disclosed that the payments made by the apex Bank represent debts by the power sector in proportion to the obligations to repay the facility by five DISCOs that have so far signed up to the facility.

Emefiele disclosed that Discos owes gas suppliers as much as, N40 billion as at the end of December 2014.

While describing the disbursement to the gas suppliers as a milestone that had to be achieved, the CBN boss said the move was an important step in revitalising Nigeria’s energy sector.

He disclosed that what the CBN, in partnership with the banking sector, had done was to ensure the commercial viability of gas, adding that this was particularly so given that the gas sector had little incentive to make the necessary investments in gas exploration and infrastructure to keep up with the growth in power generation.

He recalled that the Nigeria Electricity Regulatory Commission (NERC), in August 2014, approved a commercially viable benchmark price of $2.50/mcf (one thousand cubic feet) for gas supply, and 80 cents/mcf as transportation costs for new capacity, in order to encourage existing and prospective gas suppliers’ ramp up their investments.

While appreciating the gas suppliers, Emefiele urged them to endeavour to complete the process of activating formal, binding agreements for gas volumes to power sector companies as well as deliver more of their existing gas output to existing power plant.

The governor further encouraged them to make necessary investments to ensure that gas keeps pace with the development of new gas-fired power plants and the expansion of existing plants.

Emphasising that the CBN ordinarily had no business in the power chain, he disclosed that the Bank and the banking sector had to intervene owing to the shortfall shortfalls in power sector revenues caused by needed adjustments in the electricity tariff and legacy gas debts.

He therefore admonished the gas suppliers to see the move by the banking sector as a clear sign of the Federal Government’s commitment to change the course of both the domestic gas sector and the power sector.

Companies that got paid were: Chevron, N2.04 billion; Ibom Power, N1.7 billion; Shell, N965 million; ND Western N852 million; Seplat, N739 million; NPDC, N407 million; and Pan Ocean, N 230 million. Eko Disco also received N4.4 million.

Speaking on behalf of the gas suppliers, Supo Shadiya of the Chevron/NNPC Joint Venture Company, said that the payments were a major relief to the sub-sector and pledged that they were now more confident to play greater roles in the supply of stable electricity power to Nigerians.

“There is a very strong commitment on the part of suppliers to domestic gas market and indeed it is important for us to partner with the government to achieve the mission that the government has set for the power sector over the years. We are happy to be part of that”, he said.

According to him, the gas suppliers had been waiting anxiously since November, 2014, when the MoU for the facilities was signed.

He noted however that there were certain enablers which the NNPC had to make available, in line with the provisions of the 2014 MoU and there urged the national oil firm to play its part for a successful implementation of the agreement.

The enablers included gas infrastructure as well as security of facilities which attacks have in the recent past brought power generation to its lowest.

CBN had set aside N213 billion to help stabilize the electricity power sector by providing funds to operators in the sector to enable them make necessary investments as well as, clear debts that

have been considered as inhibiting power supply to homes and businesses.