The minister of finance, budget and planning, Zainab Ahmed has said that the federal government’s N1.3 trillion intervention fund for the power sector has not yielded any significant result.
The money was approved in 2017 to tackle the monthly liquidity challenges faced by GenCos, as the distribution companies (DisCos) keep defaulting in paying for the monthly invoice of electricity received.
However in a letter dated November 19, 2021 and addressed to President Muhammadu Buhari, Zainab Ahmed disclosed how funds can be raised through the sale of make-up gas to address the financial challenges in the sector.
The Minister also revealed that Nigeria paid $137 million in two years for gas and electricity that were never used in the “take or pay deal” the country entered into with some investors in the power sector.
The letter read;
“The industry requires N85 billion per month to pay for gas, generation, transmission and distribution operations,” the minister wrote.
“Recent intervention (between 2017-2019) towards addressing the power sector problem includes the 701 billion and 600 billion payment assurance facilities (PAFs) secure from Central Bank of Nigeria (CBN) to take care of some of the FG contingent liabilities within the sector and which have not yielded significant result.
“Shortfalls caused by the large difference between allowed tariffs and what is required for cost recovery cost the FGN a total sum of N1.249 Billion between 2017 to 2019. These resources are more needed for human capital development and infrastructural investment. The above includes some projects like the World Bank loan (up to $3 billion) for tariff shortfall and the euro 2.6 billion for the presidential power initiative is considered to support Nigerian Electricity Supply Industries (NESI).”