Stakeholders have expressed concern about the power sector’s continued reliance on the Central Bank of Nigeria (CBN) more than eight years after it was turned over to private investors.
The experts who said the CBN’s continuous bailout could not be sustained agreed that the sector would have collapsed without the apex’s loans and interventions, but that it was past time for the sector to stand on its own.
Recall that the CBN launched the Power and Aviation Intervention Fund (PAIF), which is currently hovering around ₦300 billion, the Nigerian Electricity Market Stabilisation Facility (NEMSF), which is currently hovering around ₦213 billion, a ₦140 billion Solar Connection Intervention Facility, a ₦600 billion tariff shortfall intervention, and a recent N120 billion intervention designed for mass consumption.
Similarly, the federal government released N600 billion for the power sector to bridge shortfalls in monthly invoice payments by key stakeholders in the sector, with another ₦701 billion CBN facility deployed in March 2017 as Power Assurance Guarantee.
The CBN announced earlier this year that it has disbursed over ₦1.3 trillion to support the power supply to Nigerians over the last five years.
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CBN governor, Godwin Emefiele, while speaking at a news conference following a meeting of the Bankers Committee in Abuja said: “So, what we are trying to say here is that the CBN has always been there to support the power sector. As you all know, we have disbursed over N1.3 trillion in the last five years to support the generating companies or DisCos or acquire equipment or buy meters or improve what is being paid to electricity generating companies; so that they can continue to pay for their gas and then the system can continue to operate”.
Prof. Wunmi Iledare, an energy expert, noted that the CBN’s interventions as a repayable loan were understandable, but that the current structure of the country’s electricity market could undermine the interventions.
Economic analyst Stephen Kanabe told reporters that the apex bank’s intervention in the distribution segment of the nation’s power sector, particularly metering, would help to significantly reduce the lingering challenges of poor infrastructure and arbitrary billing of end-users.
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Habeeb Jaiyeola, associate director, Energy, Utilities and Resources at Pricewaterhouse Coopers, has repeatedly stated that providing financial support to industries, particularly the power sector, is a welcome development.
Despite the need to ensure that the facilities are duly paid back, Jaiyeola stated that the government’s continued support for the power sector will have an overall impact on the sector to facilitate the necessary progress, adding that the federal government has equity ownership in the DisCos.
He urged authorities to clearly outline and monitor interventions to ensure they met projected objectives, noting that the National Mass Metering Programme, for example, may need to be measured against some of its set objectives in terms of coverage, availability, and completion time.
“The world over, government interventions are used to catalyse economic development. In many cases, government interventions are quite critical in controlling the 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 said.
