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Government offers to offset N25bn debt owed gas supplies

04 August 2014, 18:04

Abuja - The federal government has offered to offset the N25 billion owed to companies that supplied gas to privatised independent power plants.

The funds will be provided by the Central Bank of Nigeria (CBN).

The Minister of Petroleum Resources, Diezani Alison-Madueke, explained that the payment of the debt was one of the measures taken to improve electricity generation in the country.

The minister was speaking at a joint briefing by the Ministers of Petroleum and power, the CBN Governor, and the chairman of the Nigerian Electricity Regulation Commission.

She said stakeholders in the power sector had come together to form a synergy that would empower them to solve the problems in the power sector.

Alison-Madueke pointed out that inadequate gas supply to power plants had been a major challenge to the federal government’s power sector reform.

Chairman of  the Nigerian Electricity Regulatory Commission (NERC), Sam Amadi, said the N25 billion intervention  is not a windfall for the sector.

Amadi explained that the money would be absorbed into the new Multi-Year Tariff Order (MYTO), which is currently under review and will be repaid by the distribution companies.

According to him, “The money supplied by the CBN is not a windfall.

"Those gas costs are stranded cost that even for the new owners all the costs did not happen under their watch.

“It means that this N25 billion, or what that is agreed at, eventually will still be repaid by the distribution companies through the tariff process.

“It is like an intervention to secure for us confidence in the gas market and the ultimate responsibilities is on the discos,” Amadi said.

 - NAN

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