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Power: FEC okays CBN intervention funds for GENCOs

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Power: FEC okays CBN intervention funds for GENCOs

The Federal Executive Council (FEC) has approved the extension of a funding facility by the Central Bank of Nigeria (CBN) for electricity generation companies (GENCOs) in the country. CBN had earlier stepped into the liquidity and funding challenges facing the electricity sector and disbursed a total of N120.2 billion to different electricity distribution companies (DISCOs), GENCOs, service providers and gas companies. The fourth tranche of the disbursement, which is under the N213 billion Nigerian Electricity Market Stabilization Facility (NEMSF), was made in 2016.

Government had also signed power purchase agreements by the Nigerian Bulk Electricity Trader (NBET) to signal activation of industry contracts for power generation under a contract based market. Addressing State House Correspondents yesterday after the FEC meeting at the Presidential Villa presided over by Vice President Yemi Osinbajo, the Minister of Finance, Mrs. Zainab Ahmed, said Council approved “an extension of a CBN intervention that will be used to continue to support the power sector, specifically the generation arm of the sector.” Ahmed said: “This is based on a commitment that we signed into as a country, where we have several guarantees to the GENCOs to bridge any gap that they have after the NBET has settled them.” According to her, the CBN’s assurance facility that was approved yesterday is to pay the GENCOs for any financing shortfall that they have after the bulk trader NBET settles them.

“So it is a cost on government, it is loan; government will be paying it back to the CBN. The essence is to meet the contract obligations that government signed with the GENCOs on the assurance we gave them on off taking any power that they generate after payment is made from the NBET,” she added. Speaking further, the Finance minister disclosed that FEC approved a new import levy for sustainable financing of Nigeria’s membership subscription in the African Union (AU). Nigeria will base a rate of 0.2 per cent as the new import levy on Cost, Insurance and Freight (CIF) that will be charged on imports coming into Nigeria from AU countries. According to the Finance Minister, there are some exceptions on goods originating outside the territory of member countries.

“The FEC meeting approved a new import levy for sustainable financing of Nigeria’s membership subscription in the African Union. It approved a rate of 0.2 per cent as a new import levy on CIF that will be charged on imports coming into Nigeria, but with some exceptions. “The exceptions include goods originating from outside the territory of member countries that are coming into the country for consumptions. “It also includes goods that are coming in for aid and also it includes goods that are originating from non-member countries but are imported through specific financing agreements that ask for such kinds of exemptions. It also exempts goods that have been ordered and are under importation process before the scheme was announced into effect. “The purpose of this new levy is to enable the African Union member countries pay on a sustainable basis their subscriptions to African Union. “And when the AU raises a subscription invoice, we will settle from that account and whatever is left, we can use it also to settle our subscriptions to other multilateral institutions and if there is anything left, the balance is used to finance the budget.” Ahmed added that the second approval was the setting up of the steering committee to be chaired by the Vice President for the design and implementation of a national single window. “The national single window is a web portal that would be able to integrate all the government agencies that are operators in the port business or trading in the port system. “The trading platform will enable better efficiency of port operations and we project that it will significantly increase government revenues,” she said.

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