FG approves N701bn Power Purchase Guarantee for Gencos

FG approves N701bn Power Purchase Guarantee for Gencos
March 7, 2017 Advocaat Law Practice

Further to complaints by Electricity Generating Companies (Gencos) that the inability of government-owned Nigeria Bulk Electricity Trading (NBET) to pay them for power delivered to the national grid is adversely affecting their operations, the Federal Government of Nigeria recently adopted new measures that will aid NBET to meet its financial commitments to Gencos.

 

The Federal Executive Council (FEC) approved on the 1st March the sum of N701 billion as Power Assurance Guarantee NBET. According to the Minister of Power, Workings and Housing; Babatunde Fashola, the above sum which is to be made available by the Central Bank of Nigeria (CBN) will be utilized to guarantee payment for the evacuation of power produced by Gencos for the national grid.

 

The approved sum will be drawn on monthly basis to tackle liquidity challenges (like inability to pay gas suppliers) being faced by Gencos. Furthermore, as part of the Federal Governments effort towards boosting the Gencos and intending investors confidence in the power sector, NBET will commence payment of in arrears for electricity supplied by them. It is hoped that the foregoing would bring about the needed stability in the production side of the power value chain in Nigeria. The guarantee to be provided by the CBN would be for a period of two years beginning from January this year to December 2018.