While reports of FG requesting for Loans from world bank appears to have stolen the headlines, a smaller row appears to be rising as NBET Managing Director Dr. Marylin Amobi has redeployed some officers in the Finance and Internal Audit sections to look into the N701billion loan for the GENCOs,
The officials’ stand is that it is absurd for the government to obtain a loan for some of the GENCOs who have been allegedly inflating requests for reimbursement from NBET. Also, some NBET officials are opposed to the agency leading the initiative for the N701billion loan for GENCOs, which are selling electricity to the agency.
The aggrieved officials said since the loan will be paid back through Retail Electricity Tariff, consumers will bear the burden with increase in tariffs. Following a strong internal opposition and to pave the way for the loan, the MD/ CEO of NBET has reportedly embarked on a sudden restructuring of the agency without consultations with the Minister of Power, Mr. Babatunde Raji Fashola, who is holding brief for the board.
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The board of NBET is yet to be reconstituted. But there is a relief from the CBN which has set nine conditions before the loan can be granted.In a June 20, 2017 letter to NBET, the CBN approved the N701billion for NBET as Payment Assurance Facility for Generation Companies (GENCOs) with 10 per cent per annum interest.
The letter said:
“We refer to your application for the Payment Assurance Facility for Generation Companies dated March 02, 2017 and hereby convey the Bank’s approval for the N701billion facility.
“Purpose: A bridging facility to enable Nigerian Bulk Electricity Trading Plc (NBET) provide minimum level of payment to generation companies to meet their obligations to gas suppliers and increase their levels of generation.
“The date on which the first disbursement of this facility shall occur is subsequent to the following: That all the conditions precedent, here defined, have been fully met or waived to the satisfaction of the CBN.
“Effective date: January 2017. The loan tenor is the period from Effective Date until the earlier of (i) 10 years (ii) December 31, 2028
“The facility shall be used only to assure the payments due from NBET to power generation companies for the capacity and energy delivered beginning from the invoice month of the Effective Date.”
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The CBN gave the details of the funding as follows: (i) Enhance the existing Nigeria Electricity Market Stabilization Facility (NEMFS), and (ii) CBN to subscribe to debenture to be issued by NESI Stabilization Strategy Limited(NESI SS Ltd).
“Drawdowns will be made monthly based on invoices over a period that shall not exceed 24 months from the first disbursement. All applications for disbursement will contain comprehensive breakdowns of the elements of the payment showing the amounts due to each participating generator and its approved third parties.
“Applications for disbursement will be sent by NBET and confirmed by the Permanent Secretary, Federal Ministry of Power.”
The proposed sources of repayment are as follows:
Moratorium period(on principal repayment only). Repayment of interest(Est, 73.02b NGN) to be serviced by the Federal Ministry of Finance from the Federal Government’s Consolidated Revenue Account through auto-debit from Consolidated Revenue Fund(CRF).
Post-Moratorium Period(Principal and Interest): Repayment of outstanding principal and interest will be recouped as follows:
(i) From the Retail Electricity Tariff or only if and where arrangements have been fully agreed and finalized upon at the time of repayment.
(ii) From any combination of the following: (a) Budgetary Appropriation; (b) External borrowings by the Federal Ministry of Finance(FMoF); (c) Any other payment arrangements to be agreed upon by the CBN and FMoF, including auto debit into the Consolidated Revenue Fund(CRF).
Additional indebtedness: “In addition to this facility, NBET is permitted to raise additional debt subject to prior approval from CBN which shall not be unreasonably withheld, including but not limited to Capital Market Bonds or similar securities.”
A top official of NBET spoke of some management members’ opposition to this loan because they believe that it will lead to the same problem in the petroleum sector where marketers were claiming endless subsidy grants from the government.
Further accusations include demands of “outrageous” reimbursement from NBET but through internal collaboration. An undisclosed source further stated that “One of the GENCOs actually demanded N1.251, 881,528.04billion reimbursement from NBET whereas the Audit Unit said it was only entitled to N124.352million. Another company asked for payment of N1, 023, 532,974.89billion when the Audit Unit said it only deserved N346.377million,” Courtsey News Agency Of Nigeria
Some of these GENCOs are believed to have been claiming billions of naira monthly “without any justification. The government should allow the Economic and Financial Crimes Commission (EFCC) to look into the books of the NBET and some of the GENCOS. A lot of underhand deals are being perpetrated,” the official, who pleaded not to be named said, adding: “But some forces in the management went ahead to pay billions to the affected GENCOs by circumventing the processes.
This would certainly spell bad news for investors and stakeholders as the last thing the power sector needs is another thug of war between market operators.