The Federal Government has assured that the N701-billion Payment Assurance Scheme will resolve the financing bottlenecks that have constrained the operations of Nigeria’s gas suppliers and power generation companies.
Vice President, Prof. Yemi Osinbajo, who gave the assurance in his Democracy Day speech on Monday, said the country will soon begin to see the positive impact of the power sector payment assurance initiative.
He disclosed that the Solid Minerals Development Fund has also now taken off in line with the country’s commitment to develop the sector. “Because of our unerring focus on Solid Minerals development over the last two years, the sector has, alongside Agriculture, seen impressive levels of growth – in spite of the recession,” he added.
Osinbajo said Nigeria has taken very seriously its promise to save and invest for the future despite the revenue challenges.
He also disclosed that the country has in the last two years added $500 million to the Sovereign Wealth Fund, and $87 million to the Excess Crude Account.
This, he said, is the very opposite of the situation before now, when rising oil prices failed to translate to rising levels of savings and investment.
Confirming the Vice President’s assertion, the country’s Mid Term Fact Sheet, showed that total amount of crude refined by the Nigerian National Petroleum Corporation (NNPC’s) three refineries grew from eight million barrels in 2015 to 24 million barrels in 2016, and 10 million barrels in the first quarter of 2017.
It explained that the Federal Government exited the cash call arrangement through which the NNPC traditionally funded its share of the crude oil exploration and production Joint Ventures (JVs) with International Oil Companies (IOCs) in 2016.
It added that the Cash Call obligations had consistently put pressure on the Federal Government’s finances, and a failure to fully fund them had resulted in the accumulation of debt arrears of more than $6 billion as at December 2015.
According to the fact sheet, starting 2017, a new funding mechanism was introduced, which will allow the JVs to transform into independent, self-financing entities. “The advantages for the Federal Government finances include: freeing-up the Federal Government from the budgetary obligation of coming up with the cash calls and a potential increase in Nigeria’s oil production to about 2.5 million barrels per day, on account of optimal funding.
“Also, as part of the reforms, the debt arrears owed the IOCs have been negotiated downwards to approximately $5.1 billion - for which a long-term repayment plan has been drawn up”, it added.
Meanwhile, the interim Managing Director, Transmission Company of Nigeria (TCN), Usman Gur Mohammed, has called on market participants to put in more efforts in order to tackle the liquidity problem in the power sector.
He made the call at a stakeholders’ interactive forum with the theme; ‘‘Liquidity and Infrastructure Challenges in NEM: Beyond the Blame Game,” in Abuja.
He assured the stakeholders that the Market Operator was operating independently as TCN management does not interfere or influence her operations and activities.
According to him, the non-interference is to encourage Market Operators to operate transparently for the good of the entire market.
The TCN boss disclosed that several multi-million dollar transmission projects were part of the mix.
Head, Independent System Operation (ISO), Musa Gumel, charged stakeholders to work together as a team, to enable them come up with innovative solutions that would tackle liquidity problem in the Nigerian electricity sector.
He added that management was upgrading staff manpower to enable them operate the system more efficiently and minimise system collapses.
In the technical paper presented by the first Market Operator, titled; “The Problems of Low Liquidity in the Nigerian Electricity Industry,” Uzoma Achinanya, described the power sector liquidity problem as a critical underfunding of the sector to the extent that plants and equipment cannot be adequately maintained or efficiently operated.
He disclosed that the NEM liquidity problem was as a result of the liquidity gap between the revenue requirement of the market or expected revenue for power supplied and actual revenue available to the market.
Source: The Guardian