FG paying annual stabilisation fund of N150bn on power sector – official

THE Federal Government has disclosed that it is paying an annual stabilisation fund of N150 billion to keep the power sector in business.

The Head, Origination, Contract Management and Administration of the Nigerian Bulk Electricity Trading Company (NBET), Johnson Akinnawo, told journalists today at a workshop holding in Lagos that the stabilisation fund had been bridging the gap of some outstandings in payment shortfall in the sector.

Akinnawo said the gap arose from the Federal government’s inability to effect cost-reflective tariff over the years.

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He said, “The government has to rescue the power sector from lots of overhanging debts. The DisCos’ (power distribution companies) balance sheet is not good enough, but through the power sector recovery programme, the CBN is ensuring recoveries of debts in order to sustain the sector.”

He stressed that the government was determined to ensure that all power sector players obey all the necessary laws and abide by market rules to avoid distressing debts.

“The Central Bank of Nigeria has escrowed Distribution Companies’ accounts to enable recovery. The government is exploring better approach to recover debts under the power sector recovery programme,” he added.

He further said that the Ikeja and Eko DisCos were meeting the minimum remittance order (MRO) and had reached “cost reflectivity”, adding that the Nigerian Electricity Regulatory Commission (NERC) had been enforcing the necessary regulations to ensure that other distribution companies comply.



    The ICIR recalls that the NERC effected a restructuring of part of its ownership rules as part of measures to ensure that Discos play according to the rules, and for market efficiency.

    The ICIR had reported in July this year the Nigerian government’s announcement of the restructuring of five electricity distribution companies following liquidity concerns.

    The affected companies are the Kano Electricity Distribution Company (KEDCO), Ibadan Electricity Distribution Company (IBEDC), Benin Electricity Distribution Company (BEDC), Kaduna Electric, and Port Harcourt Electricity Distribution Company (PHED).

    The NERC and the Bureau of Public Enterprise said then that the  restructuring followed Fidelity Bank’s activation of the call on the collaterised shares of KEDCO, BDEC, and Kaduna Electric over their inability to repay loans they obtained to pay for assets acquired in the 2013 privatisation exercise.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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