MONEY - CBN Set To Clear Gas Legacy Debt As They Pay Gas Suppliers N6.9b

The Central Bank of Nigeria, CBN, yesterday paid gas suppliers the sum of N 6. 9 billion as part of its Nigerian Electricity Market Stabilisation Fund set aside to ensure a steady power supply to the Nigerian public.

The Governor of CBN, Mr. Godwin Emefiele, who handed cheques to seven companies in Abuja, said that the facility was a part payment for debts owed the gas suppliers by electricity Distribution Companies, Discos, across the country.

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.

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

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.

According to the CBN boss, “ these payments represent debts by the power sector in proportion to the obligations to repay the facility by the five DisCos: Eko, Ibadan, Kano, Port-Harcourt and Enugu, that have so far signed up to the facility.

“As more DisCos become confident that the issues with their tariff regimes will be resolved and sign up to the facility, we expect to make further disbursements to gas suppliers and other power sector participants.

“For us at the CBN this is very significant as we have started to clear your legacy debts. We will ensure that the outstanding debts are cleared once we are able to get the other DisCos that are supposed to be in the chain to fall in line so that we can all work together for the progress of this country, by ensuring that we have electricity for our people.”

The CBN boss noted that gas pricing in the country has become commercially viable to the to the extent that existing investors could expand their operations and that even new investors could be attracted to the Nigerian market.

His words, “What we have done is to ensure that gas pricing is commercially viable. On the day that we decided to review the gas pricing, you would agree with me that it was a major leap. Representatives of your companies, including your Managing Directors , all affirmed that the pricing is now commercially viable to the extent where it encourages you and even prospective investor to jump into the line and invest for more gas.”

The governor said that the money was not just a loan made to pay for gas delivered to DisCos but “a loan with clear development objectives” and that as such gas suppliers should deliver more gas output to existing power plants.

He added that CBN would work with the NNPC to ensure that it played all roles required of it in the MoU to ensure that gas production and gas supply is ramped up immediately. We cannot afford a situation where out of 23 generating plants that we have in Nigeria, 20 are gas-fired and they cannot achieve their optimum level of power generation because of inadequate gas supply.

Mr. Supo Shadiya of the Chevron/NNPC Joint Venture Company, who spoke on behalf of the gas suppliers, 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.