After Gulping CBN’s N1.3trn Intervention Funds, Power Sector Needs to Be Self-sustaining, Say Stakeholders

Emmanuel Addeh in Abuja

After disbursing about N1.3 trillion to the power sector in the last five years, industry stakeholders have stressed the need for the sector to be self-sustaining from intermittent Central Bank of Nigeria (CBN) intervention.
However, the experts stated that the sector would have collapsed without loans and interventions by the apex bank in the last few years, commending the bank for the initiative.

In the last couple of years, the CBN had launched the N300 billion Power and Aviation Intervention Fund (PAIF), the Nigerian Electricity Market Stabilisation Facility (NEMSF) amounting to N213 billion and the N140 billion Solar Connection Intervention Facility.

In addition, it has paid over N600 billion tariff shortfall intervention to ensure stability in the sector as well as a recent N120 billion intervention designed for mass metering.

“We have disbursed over N1.3 trillion in the last five years to support the sector through the generators or Discos or to acquire equipment, buy meters or to improve what is being paid to electricity generating companies so that they can continue to pay for their gas,’’ CBN Governor, Godwin Emefiele, said recently.

In his intervention, Associate Director, Energy, Utilities and Resources at Pricewaterhouse Coopers, Habeeb Jaiyeola, insisted that providing financial support to industries, especially the power sector remained a welcome development.

However, he highlighted the need to ensure that the facilities are duly paid back, saying that the government’s continued support to power sector would have an overall impact on the sector to facilitate the required progress.
He urged the authorities to clearly outline and monitor the interventions to ensure it achieved projected objectives, adding that the national mass metering programme for instance may be needed to be checked against some of its set objectives in terms of coverage, availability, and completion time.

He said: “An assessment of the impact of intervention funding in the power sector also needs to be looked into. While government intervention continues to be an important sector catalyst, monitoring impact will ensure government scarce resources are appropriately channelled for the benefit of Nigerians.”

According to him, infrastructure funds are used world over for the development of critical infrastructure which guarantee constant returns on investment, adding that a critical element of the success of the funds was adequate planning and strategic contracting.

He added: “The world over, government interventions are used to catalyse economic development. In many cases government interventions are quite critical in controlling cost of borrowing in developing sectors.

“The CBN intervention remains a positive tool for the development of the domestic gas sector. However, the payback has to be enforced to ensure the fund remains available for further critical interventions.”

Jaiyeola stated that to achieve sustainable growth, interventions alone cannot be the solution, adding that an appropriate pricing system needs to be instituted to enable the forces of demand and supply determine price and enable adequate returns on investment.

Also, an energy expert, Prof. Wunmi Iledare, noted that while interventions by the CBN as a repayable loan was understandable, the current structure of the electricity market in the country could mar the interventions.

Also, an economic analyst, Stephen Kanabe said the intervention by the apex bank in the distribution segment of the nation’s power sector, especially metering would contribute to significantly reduce the lingering challenges of poor infrastructure and arbitrary billing of end-users.

Former Chairman of the Nigerian Electricity Regulatory Commission (NERC), Sam Amadi had also noted that though the CBN intervention remained a special funding to deal with liquidity crisis and legacy debt in the sector,  it would  be repaid through a convenient process that would not adversely affect the sector’s investment plans.

“The gains of the fund are two fold: whether CBN is getting repayment as and when due, I think through the escrow the CBN can guarantee itself repayment. But the bigger issue is whether the fund has improved the operations of the Discos,” he stated.

The apex bank had recently noted that a total of 300MW capacity increase was reported as a result of fund utilisation towards the rehabilitation of plants.

It listed the rehabilitation of seven gas turbines at three major thermal power plants namely: Geregu, Transcorp Ughelli, and Ibom power plants as recent breakthroughs.

In addition, it stated that the intervention had enabled the Distribution Companies (Discos) to provide bank guarantees to the Nigerian Electricity Bulk Trader (NBET) as well as purchase over 171,071 units of meters comprising both maximum demand and single phase meters.

Added to that, it listed the rehabilitation of over 332kms of 11KV lines and 130km of 0.45KV lines; procurement of over 70,310 500 KVA transformers and construction of 34 new distribution substations as well as acquisition of one mobile injection substation as results of its intervention.

On PAIF, it noted that the objectives include fast-tracking of the development of electric power projects, especially in the identified industrial clusters in the country; improve power supply, generate employment and enhance the living standard of the citizens.