By Henry Umoru & Joseph Erunke
ABUJA—THE Senate, yesterday, ordered the Federal Government to immediately stop its plan to raise a secured bond of N309 billion to finance the shortfall in the Nigerian electricity market.
The Red Chamber particularly directed that the Federal Ministry of Power, Works and Housing and the Nigerian Electricity Regulatory Commission, NERC, must immediately halt the raising of the bond by the Nigerian Bulk Electricity Trading Plc, NBET.
The Senate action was sequel to a motion sponsored by Senator Mustapha Bukar, APC, Katsina North, who in his motion, said he was worried that in spite of lack of noticeable improvement in the electricity sector, “whether in the area of investment, generation, transmission or distribution, tariffs have been increased twice since 2013 without any improvement in the services.”
Bukar insisted that the Federal Government’s proposed sale of bonds worth N309 billion to finance the shortfall in the Nigerian electricity market must be stopped.
He said he was worried that the new borrowing was being planned to be paid as a charge on the market revenue stream, ahead of CBN, stressing that the first priority was to stop the bleeding in revenue and optimize efficiency by the operators.
He said he was equally worried that the successor distribution companies had failed or to produce audited financial statement to NERC and BPE for the last two years, neither had they held annual general meeting to disclose their performance to the shareholders, including the Federal Government.
Following the motion, the Senate subsequently ordered the Federal Government to stop the proposed issuance, pending investigations by its joint committees on Power and Privatization.
The Senate also resolved and mandated the committees on Power and Privatization to investigate the post-privatization performance of the all players in the power sector, in line with their performance agreement, including the management and disbursement of loans or bonds of the sector agencies.
Senator Bukar said in his motion that the planned borrowing was being mooted, despite interventions by the government, 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.
He further noted that the shortfall had continued to escalate at the rate of about N15 billion per month which is equivalent to N500 million daily, adding that the total shortfall as at December 31, 2015, stood at N400 billion.
“Continued incidence of market shortfall is a disincentive for new investors to venture the 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,” Bukar added.
He argued that the issuance of bonds would amount to not only spoon-feeding the operators in their inefficiency, but also 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 future.