Senate halts FG’s plan for N309b Electricity Bond

Plans by the Federal Government to raise a bond of N309 billion to finance the shortfall in the Nigerian electricity market suffered a setback on Tuesday as the Senate stood down the plan.

The Senate put the plan on hold pending investigations on the proposal by its joint committees on Power and Privitisation.

Senate took the stand through a motion moved by Senator Muhammed Bukar (APC, Katsina North).

It urged the Federal Ministry of Power, Works and Housing and the Nigeria Electricity Regulatory Commission (NERC) to immediately halt the process of raising the bonds by Nigeria Bulk Electricity Trading Company (NBET).

However, it mandated the committees on Power and Privatization to investigate the post-privatization performance of all players in the power sector in line with their performance agreement including the management and disbursement of any loans or bonds of the agencies in the sector.

Presenting the motion, Sen. Bukar, said the planned borrowing was being muted, despite series of  interventions such as the bailout by the Central Bank of Nigeria (CBN) ‎in March, 2015 to the tune of N213 billion through the Nigeria Electricity Sector Intervention (NESI).

The Senator described the bond idea as amounting to only spoon-feeding the operators in spite of their inefficiency.

The bond he noted would be at great cost to Nigerians as the risk of default would cause the crystallization of the Federal Government Sovereign Guarantee and lead to national energy crisis in the future..

According to him, the shortfall has continued to escalate at the rate of about N15 billion per month which is equivalent to N500 million daily. He said the total shortfall as at December 31st, 2015, stood at N400 billion.

He said, “Continued incidence of market shortfall is a disincentive for new investors to venture their Nigerian electricity market.

“This implies that the projected generating capacity is an illusion. As a matter of fact, any increment in generating capacity would further aggravate and escalate the market shortfall,”.