Nigeria government establishes company to guarantee power generation

“Finance Minister Ngozi Okonjo-Iweala will be chairman of the board of Nigeria Bulk Electricity Trading Plc.”

President Goodluck Jonathan, on Tuesday in Abuja, announced the establishment of a new state company that will guarantee to pay for power generated in the country as it will potentially open up billions of dollars of investment. 

“Government has therefore incorporated the Bulk Trader as a guarantor to boost confidence to potential investors that they will be paid for the power they generate and sell to the distribution companies,” he said.

“We are unfortunately faced with a situation where our power distribution companies find it challenging to collect enough revenue from their customers to pay for power they receive from generating companies. In this situation, potential investors do not have the confidence that when they produce and deliver power, they will receive payment.”

Nigeria, which only produces around 10 per cent of its power needs despite having the world’s seventh-largest gas reserves is blighted by persistent electricity outages which force businesses and individuals who can afford them to rely on diesel generators.

Investors have shown interest in a huge potential market of more than 140 million people but expressed concerns about payments from unreliable distribution firms.

The African Finance Corporation, which funds infrastructure projects across the continent, has said foreign investors are ready to pump billions of dollars into the Nigerian power sector if the regulatory framework can be resolved.

According to the president, Finance Minister Ngozi Okonjo-Iweala will be chairman of the board of Nigeria Bulk Electricity Trading Plc, which is expected to start signing agreements with power producers.

He added that international partners, including the World Bank, were providing partial risk guarantees to support the company.

-By Chris Onyeose

Source: DailyTimes