FEC gives CBN nod on intervention funds to GENCOs

Mathew Dadiya, Abuja

The Federal Executive Council (FEC) presided over by Vice President Yemi Osinbajo has approved the extension of a funding facility by the Central Bank of Nigeria (CBN) for electricity Generation Companies (GENCOs) in the country.

The Daily Times recalls that the 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), generation companies (GenCOs) and service providers and gas companies.

Addressing State House Correspondents on Monday after the FEC meeting at the Presidential Villa, Minister of Finance, Mrs. Zainab Ahmed, said council also approved ”an extension of a Central Bank of Nigeria intervention that will be used to continue to support the power sector specifically the generation arm of the sector.”

Mrs. Ahmed said “this is based on a commitment that we signed into as a country, where we have several guarantees to the Generation Companies (GenCos) to bridge any gap that they have after the Nigerian Bulk Electricity Trading Plc (NBET) has settled them.”

According to her, the CBN assurance facility that was approved on Monday 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.

The 4th Tranche of the disbursement, which is under the N213bn Nigerian Electricity Market Stabilisation Facility (NEMSF), was made in 2016.

The Federal 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.

The Finance minister also disclosed that FEC approved a new import levy for sustainable financing of Nigeria’s membership subscription in the African Union (AU).

Nigeria, she said, would base a rate of 0.2 percent 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 federal executive council 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 percent as a new import levy on Cost, Insurance, and Freight (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.”

She further explained that “the purpose of this new levy is to enable the African Union member countries pay on a sustainable basis their subscriptions to African Union”.

The minister said: “So what we are trying to do in Nigeria is to domesticate and implement this decision that was taken in Kigali on the 27th Assembly of the Heads of State and Government of African Union meetings.

“The decision council took today is that we will open a central bank account for that particular purpose so all the funds collected by the Nigerian customs will be pooled into that account.

“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.

“The council also approved that for Nigeria knowing that what will accrue from this new levy will be more than what is required as subscriptions to the African Union, that the balance that will be left will be ring first and put in a special account in the Central Bank of Nigeria and will be used to finance her subscriptions to multilateral organizations as the World Bank, African Development Bank, Islamic Development Bank and institutions like that.

“And if there is any excess left from that in the revenue pool, it will be used to finance the budget.”

Continuing, Mrs. Ahmed said: “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 and implementers 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.”