…as FG okays CBN intervention fund for GENCOS
By Johnbosco Agbakwuru
ABUJA – THE Federal Executive Council, FEC, on Monday approved a new import levy for sustainable financing of Nigeria’s membership subscription in the African Union, AU.
The Federal Government also approved an extension of a Central Bank of Nigeria intervention that will be used to support the power sector specifically the generation arm of the sector.
The Minister of Finance, Zainab Ahmed, disclosed this while briefing State House Correspondents at the end of the weekly FEC meeting presided over by the Vice president, Yemi Osinbajo at the Council Chamber, Presidential Villa, Abuja.
Ahmed said the FEC approved a rate of 0.2 percent as the new import levy on Cost, Insurance and Freight, CIF that will be charged on imports coming into Nigeria from AU countries.
She explained that there are some exceptions on goods originating outside the territory of member countries.
According to him, “The federal executive council meeting approved a new import levy for sustainable financing of Nigeria’s membership subscription in the African Union. It approved a rate of 0.2 percent as a new import levy on Cost, Insurance, and Freight (CIF) that will be charged on imports coming into Nigeria but with some exceptions.
“The exceptions includes goods originating from outside the territory of member countries that are coming into the country for consumptions.
“It also includes goods that are coming in for aid and also it includes goods that are originating from non-member countries but are imported through specific financing agreements that ask for such kinds of exemptions. It also exempts goods that have been ordered and are under importation process before the scheme was announced into effect.”
She further explained that, “The purpose of this new levy is to enable the African Union member countries pay on a sustainable basis their subscriptions to African Union.
“The council also approved that for Nigeria knowing that what will accrue from this new levy will be more than what is required as subscriptions to the African Union, that the balance that will be left will be ring first and put in a special account in the Central Bank of Nigeria and will be used to finance her subscriptions to multilateral organizations as the World Bank, African Development Bank, Islamic Development Bank and institutions like that.
“And if there is any excess left from that in the revenue pool, it will be used to finance the budget.”
On the second approval from her ministry, she said, “The second approval was the setting up of the steering committee to be chaired by the Vice President for the design and implementation of a national single window.
“The national single window is a web portal that would be able to integrate all the government agencies that are operators that are implementers in the port business or trading in the port system.
“The trading platform will enable better efficiency of port operations and we project that it will significantly increased government revenues.”
She said that the Council also approved an extension of a Central Bank of Nigeria intervention that will be used to support the power sector specifically the generation arm of the sector.
“This is based on a commitment that we signed into as a country, where we have several guarantees to the Generation Companies (GenCos) to bridge any gap that they have after the Nigerian Bulk Electricity Trading Plc (NBET) has settled them,” she said.
Recall that the CBN had earlier stepped into the liquidity and funding challenges facing the electricity sector and disbursed a total of N120.2 billion to different electricity distribution companies (DISCOs), power generating companies (GENCOs), service providers and gas companies.
The 4th Tranche of the disbursement, which is under the N 213 billion Nigerian Electricity Market Stabilization Facility (NEMSF), was made in 2016.
Government also signed power purchase agreements by the Nigerian Bulk Electricity Trader (NBET) to signal activation of industry contracts for power generation under a contract based market.
Explaining on the AU levy, she said that the African Union took the decision to enforce the levy by member countries.
She said, “So what we are trying to do in Nigeria is to domesticate and implement this decision that was taken in Kigali on the 27th Assembly of the Heads of State and Government of African Union meetings.
“The decision council took today is that we will open a central bank account for that particular purpose so all the funds collected by the Nigerian customs will be pooled into that account.
“And when the AU raises a subscription invoice, we will settle from that account and whatever is left, we can use it also to settle our subscriptions to other multilateral institutions and if there is anything left, the balance is used to finance the budget.
“The central bank assurance facility that we got approval for today is to pay the gencos for any financing shortfall that they have after the bulk trader NBET settles them. So it is a cost on government, it is loan, government will be paying it back to the central bank.
“The essence is to meet the contract obligations that government signed with the gencos on the assurance we gave them on off taking any power that they generate after payment is made from the NBET.”