The Federal Executive Council (FEC) on Wednesday approved N701 billion as Power Assurance Guarantee for the Nigeria Bulk Electricity Trading (NBET).
The council, presided over by Acting President Professor Yemi Osinbajo, also approved N263 million for three research institutions to produce gum arabic seedlings.
Minister of Power, Works and Housing, Mr. Babatunde Raji Fashola, who disclosed yesterday at the the end of the council meeting, said the N701 billion NBET fund would be provided by the Central Bank of Nigeria (CBN).
He said the fund is meant to guarantee payment for the evacuation of power produced by Generating Companies (GenCos) for the national grid, and would be drawn on monthly basis to tackle liquidity challenges faced by GenCos.
The minister explained that NBET would pay GenCos in arrears of electricity generated as a deliberate step to improve their confidence and that of intending investors.
”NBET as you know is the government’s own company, that is the Bulk Trader Electricity who buys power from the GENCOS. The liquidity problems that have characterized the market have affected NBET’s ability to deliver on its public private partnership (PPP) obligations through the GENCOS.
“So, going forward in order to strengthen NBET, CBN is proving a payment assurance guarantee for any energy produced by any GENCOS, so that the GENCOS can pay their gas suppliers when they get paid. So that the hydros can continue to operate.
“What we seek to achieve here is to bring some stability to the production side of the power value chain and also give confidence to investors who want to come in, who are concerned about how to recover their money, payment assurance and also people who are planning to invest in the gas sector which is being championed by the ministry of petroleum, they also are saying the same thing in terms of payment for gas produced.
“So, the approval of council was to provide this guarantee for NBET which is a 100 percent government owned company to pay on a monthly basis it’s obligations for energy actually produced on to the grid to the GENCOS that are it’s customers,” he said.
Also speaking, Minister of Agriculture and Rural Development, Mr. Audu Ogbeh, said the council also approved N263 million for three research institutions to produce gum arabic seedlings for Nigerian farmers and for export.
He said the country has earned as much as $43 million from export of gum arabic last year, and that more would be earned with increased production, especially in view of the fact that the commodity is in high demand in 17 other countries.
The minister said government is making similar efforts to boost cassava production in the country.
