Reps halt N309bn electricity bond

The House of Representatives on Wednesday halted a plan to raise a Federal Government secured bond of N309 billion to finance the “outrageous shortfalls’’ in the Nigerian Electricity Market.
The House also called on the Federal Ministry of Power, Works and Housing, and the Nigerian Electricity Regulatory Commission, Nigerian Bulk Electricity Trading (NBET) to immediately halt the move to raise the bond.
This followed a motion by Rep. Edward Pwajok (Plateau-PDP), which was unanimously adopted by members through a voice vote.
Moving the motion, Pwajok expressed concern that the planned massive borrowing was in spite of intervention by Central Bank of Nigeria (CBN) in March 25, 2015, through the grant of a bailout.
According to him, the bailout is to the tune of N213 billion through the Nigerian Electricity Sector Intervention (NESI) facility.
“In spite of that intervention, the shortfall, instead of being wiped out, has continued to escalate at the rate of about N15 billion per month (equivalent to N500 million daily).
“It rose to a total-market shortfall of N400 billion as at Dec. 31, 2015.
“A continuing incidence of market shortfall is a distinctive action for new investors to venture into the Nigerian electricity market.
“The implication being that the projected generating capacity expansion is an illustration since any increment in generating capacity will further escalate the market shortfall,’’ he said.
Pwajok added that Distribution Companies (DISCOs) which collected revenues failed to remit in full to other market participants without any measure by the Nigerian Electricity Regulatory Commission (NERC) to block the leakages.
He added that there were no penalties for defaulters.
The lawmaker also expressed concern that in spite of no noticeable improvement in the electricity sector, either in the area of generation, transmission or distribution, tariffs had been increased more than twice since 2013.
Contributing to the motion, Rep. Chris Azubogu (Anambra-PDP), said that NERC was not doing much, adding that year in year out, it sought for bailout from the federal government.
Also Rep. Johnson Agbonayinma (Edo-PDP) said: “This is a total failure to the Nigerian people.
“There is a lot of question as to how the bailout to the tune of N213 billion through NERC was utilised.
“We need to call on the CBN Governor to come and explain what the N309 billion bond will be used for,’’ he said.
Rep. Babajimi Benson (Lagos-APC) also said that CBN Governor, Minister of Power, Works and Housing should be invited to justify why there should be need to borrow N309 billion for the bail out.
Also contributing, Rep. Wale Raji (Lagos-APC), said that Nigerians were being subjected to darkness at huge cost, adding that the people could not continue to subsidise the electricity supply tariffs.
However, Rep. Sadiq Ibrahim (Adamawa-APC), who spoke against the motion, said that the Nigerian Government owned 40 per cent of DISCOs and Generating Companies (GENCOs).
“We are investing in ourselves as a nation if the bond is approved, it is highly technical.
“It will be sending wrong signals to new investors if not approved and we must do all to savage the companies for the good of the nation,’’ he said.
The House urged NERC to devise a mechanism to monitor, measure and enforce full monthly remittance by DISCOs, recoup all misappropriated funds that resulted in the accumulated market shortfalls.
The House also called on NERC to apply sanctions for any defaulter including the threat to withdraw the licences of erring DISCOs.
It, therefore, mandated its Committees on Power, Privatisation and Commercialisation and Aids, Loans and Debt Management to investigate the matter and report back within six weeks.