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Tuesday, 2 September 2014
CBN offers to pay $283.6m gas suppliers’ debt
The Central Bank of Nigeria (CBN) is working on modalities to enable it pay the $283.6 million owed gas suppliers.
This decision followed a meeting held by the Ministries of Petroleum Resources, Power, CBN and the Nigerian Electricity Regulatory Commission (NERC), The Nation has learnt.
The huge debt has been a major reason gas suppliers have been reluctant to meet their supply obligations to power stations. This has consequently rendered most of the generating plants idle. The few power plants that received gas, according to the generation companies, got insufficient supplies, making the power assets to operate at sub-optimal levels.
A source at the CBN told The Nation that the apex bank is bidding its time because it wanted to make sure that the necessary guarantees from the gas suppliers and power generation companies are in place, and that they would not fail in their responsibilities after the debts would have been settled.
The source said: “The processes of payment are being finalised. We had to make sure we get commitment and undertaking from the gas suppliers and power generation companies to deliver. The processes will be concluded by second week of September and payment will be made same week.”
The payment of the debt is one of the measures the government is adopting to tackle the power supply challenge and its associated problems. The new owners of the privatised power assets have attributed their financial and operational woes to lack of gas supply. They said power supply from the national grid constitutes only between 30 per cent and 40 per cent of their customers’ demand. The development, they added, also adversely affected their revenue collection and is worsened by technical and commercial losses.
“This is part of measures to guarantee sustainable solutions to the gas supply problem. The government is convinced that the payment of the debt will help boost supply of gas to power stations, which in turn will boost electricity supply to industrial and residential consumer. This will consequently help in bringing down the cost of production by manufacturing and services companies that currently depend 100 per cent on power generating sets,” the source added.
The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, had at a joint press briefing with the Minister Power, the CBN Governor, and NERC chairman, explained that the payment of the debt was one of the measures taken to improve electricity generation in the country.
She said stakeholders in the power sector came together to form synergy to be able to solve the problems in the power sector. She noted that inadequate gas supply to power plants had been a major challenge to government’s power sector reform.
“Inadequate gas supply has been ongoing for almost 20 years or more and it was inherited by this administration. Since we came in, various interventions have been put in place to bridge the supply challenge. Although gas supply has grown significantly in the last two years to about 1.5 billion cubic feet per day, demand growth continues to surpass supply, creating a short term gas supply crisis,” she added.