Fashola: FG Working to Address Forex Challenges of Electricity Operators

Chineme Okafor in Abuja
The Minister of Power, Works and Housing, Mr. Babatunde Fashola, has said the federal government is aware of the liquidity challenges of operators in Nigeria’s electricity market and is working hard to address them.

Fashola said yesterday at a power forum in Lagos that the government knew operators were going through tough times with the country’s volatile foreign exchange rates, as well as debts owed them by government’s Ministeries, Departments and Agencies (MDAs).

He stated that the Nigerian Bulk Electricity Trading Company (NBET) is working to provide more liquidity for the sector.

THISDAY had recently reported a fresh N180 billion financial package being negotiated by the NBET with the Central Bank of Nigeria (CBN) for the power sector.
A text of Fashola’s speech at the forum where he made these disclosures was provided by his senior communications aide, Mr. Hakeem Bello, to THISDAY in Abuja.

“One of the challenges that currently the afflicts the sector is the liquidity issue. I can say categorically that Government is aware of these issues ranging from the volatile foreign exchange rates to MDA debts, to collection  losses,” said Fashola.

He however stated that resolving the current liquidity challenges of the power sector requires that all operators in the value chain, not only the government, act with a common commitment, transparency and candour.

He said: “As I said at my inception of duty tour, we will pay all properly verified debts and we have started working with ministries and departments to ascertain the actual quantum of debts, with a view to solving them. The bulk trader, NBET is working to raise funds to provide financial security for the sector.

“What we need is full disclosure from all operators in and open manner to assist us ascertain that the debts are legitimate so that we can take the next steps. What we do not need is a media war between operators about who is the cause of the problem.”

He also gave reasons why the government might not be in a hurry to privatise the Transmission Company of Nigeria (TCN) which has now reverted to its management after Manitoba’s  four-year management contract in the TCN ended in July 2016.

“Let me say that to the best of my knowledge, India, South Africa, Brazil, Mexico and China have privatised their power sector and none of them privatised all the three generation, transmission and distribution at the same time. Best practice has been to privatise two and leave one; and there is no rule about which one to privatise or leave.

“That said, subject to what the Government-in-Council may decide, my personal view is that while we are in a transition of making the best of the privatisation of generation and distribution, it is sensible to wait for those sectors to stabilise, achieve efficiency and service delivery before even contemplating privatisation of transmission, if at all we are so disposed,” he said.

The minister added: “My position appears reinforced by the liquidity issues we are talking about and the current ability of government to at least fund some of its transmission projects.”