Power firms expect resumption of CBN N213bn fund

With a new electricity tariff regime recently approved to come on stream next month, power firms are expecting the restart of the N213bn intervention fund, which was suspended last year, The Punch reports.

The Federal Government had in September 2014 announced the N213bn intervention fund to be disbursed by the Central Bank of Nigeria to power firms but only N65bn of the fund was disbursed before it was later suspended because certain conditions precedent had not been met.

Some of the unmet conditions precedent included posting of letters of credit by Discos to Gencos and signing of gas agreements between gas producers and Gencos. It was also gathered that the removal of the collection losses from electricity tariff last year by the Nigerian Electricity Regulatory Commission (NERC) also led to the suspension of the fund.

The Managing Director, Eko Electricity Distribution Company, Mr. Oladele Amoda, said recently “The problem is: when you don’t have a cost-reflective tariff, banks will not want to give out any money because they want to see your cash flow. With the tariff that we are running now, the cash flow is not encouraging. Once we have a cost-reflective tariff and the banks see that we have a very reliable cash flow, then they will be able to release money to us.”