We accessed only N58bn of N1.8trn CBN’s loan for power sector, says ANED

Isola Moses | ConsumerConnect

Contrary to rife insinuations by many that electricity providers must have got much free financial support from the Federal Government but with poor results in the last years, the Association of Nigerian Electricity Distributors (ANED) better known as the DisCos, has said that out of the N1.8 trillion so far injected into the power sector, the members accessed only N58billion from the Central Bank of Nigeria’s (CBN) loan facility.

Barrister Sunday Oduntan, Executive Director, Research and Advocacy of ANED, in a statement said the power firms had never got any free money from the Federal Government.

Oduntan stated that the explanation became necessary to help in setting the records straight as there is a belief that power sector operators, including the DisCos, have been given N1.8trn free money by the Federal Government since the 2013 power sector privatisation.

Recall that Senator Ahmed Lawan, President of the Nigerian Senate, in his address at the opening session of a public hearing on ‘Power Sector Recovery Plan and the Impact of COVID-19 Pandemic’ Monday, June 15, in Abuja, FCT, was quoted to have said that “Government should not be giving free money. N1.8 trillion has been given to DisCos maybe in their books. The actual money might have been given to the GenCos.

“Government cannot afford to just spend money that you hardly understand why it is given; and I will advise the Executive that next time, to give such money, bring it to the National Assembly for approval.”

However, ANED in the statement declared that the DisCos received only about three percent of the N1.8 trillion funding for the power sector.

The association said CBN in 2014 provided N214bn Nigeria Electricity Market Stabilization Fund (NEMSF) but that the DisCos were only able to access N58bn of that till date, “and that is on the DisCos’ account books as collateral for our Letters of Credit (LC) which DisCos are repaying every month.”

According to ANED, the N214bn fund was not only for the DisCos, but to all players in the power sector, including the GenCos.

“However, the DisCos have only partaken in the N213bn NEMSF facility which is being deducted every month at source by CBN with about 10 percent interest rate for 10 years.”

ANED also reminded the government that at privatisation, the N100bn commitment that was made by the government to cushion low pre-existing tariffs before commencement of tariff setting, was not implemented.

“The CBN NEMSF 1 fund was not a subsidy but a loan to address legacy gas debts and tariff shortfalls. The NEMSF Loans currently hamper DisCos’ balance sheets, worsened by the difference in Aggregate Technical, Commercial and Collection (ATC&C) loss as used in the Tariff Model in line with the reality.

“If the N100bn subsidy was given to DisCos, it would have reduced the liability of the DisCos for better services,” it noted.

The DisCos also decried cases of hardship caused by the COVID-19 pandemic.

The Association urged the government that “as in other countries, recognition of hardship from COVID 19 should also be done by Nigeria.

“The Federal Government and its agents should embark on sensitisation campaigns informing customers of the benefit of paying their bills and the need for cost reflective tariffs.”

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