The Federal Executive Council (the “FEC”) recently approved the extension of the intervention funding facility provided by the Central Bank of Nigeria (“CBN”) to settle payments to electricity generation companies (the “GenCos”).
The approval of the extension of the facility by the FEC is pursuant to the commitment of the Federal Government of Nigeria (the “FGN”) to continue to address the liquidity problems faced by the Nigerian Bulk Electricity Trading Plc (“NBET”) which has affected its ability to meet its payment obligations to GenCos. The FGN had shown its commitment in the past by providing several guarantees to the GenCos in order to bridge any payment gap arising from the inability of NBET to fully discharge its payment obligations to the GenCos.
An example of such a guarantee from the FGN was a N701 billion payment assurance guarantee for the power sector provided in 2017 for a period of 2 years, commencing January 2017 to December 2018. Other interventions in the power sector have also been provided by the FGN through the CBN including the N300 billion Power and Aviation Intervention Facility (PAIF) and the N213 billion Nigeria Electricity Market Stabilisation Facility (NEMSF).
The approval by the FEC of the extension of the facility by the CBN shows the FGN’s continuous commitment towards revamping the Nigerian power sector. Hopefully, the proper utilisation of the facility will promote investor confidence and aid the development of the power sector.
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