FG won’t give sovereign guarantees to power investors, says Fashola

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The Minister of Power, Works and Housing, Babatunde Fashola has declared that the federal government was no longer keen on providing sovereign guarantees to investors interested in building new power plants in the country.

Government’s new position may not be unconnected with a not-too-palatable experience with the Azura Power project in Edo State.

Instead of providing sovereign guarantees, the government, Fashola said, would support interested investors with stable conditions for their investments.

With regards to claims that Nigeria may have defaulted in monthly payment of revenue due to the 459 megawatts (MW) Azura-Edo power plant and that its promoters were about to call up the sovereign guarantee due to them, Fashola stated that no payment default has been recorded so far.

He also noted that the government has learnt lessons from its negotiation of sovereign guarantees with Azura and was no longer keen on giving any of such guarantees to new investors in power systems in Nigeria.

Fashola said, “We are not in default. The payment cycle to Azura like all others goes with the payment cycle in the electricity industry, where we first collect what the Discos have made and remit and we provide the balance with the payment assurance guarantee.

“The Azura project was not initiated under this administration; it was started by the previous government but they couldn’t complete the paper work because the bureaucracy was not encouraging enough. We don’t have difficulties at this moment to the best of my knowledge.

“That is why you probably hear from companies now they want sovereign guarantee and we say no, wait a minute, it is not government that wants the power, it is the people. Why don’t you modify your business model and meet with the people because people who sell generators get their power sold without sovereign guarantee, and if all they are selling is power plants and you have molecules of energy, which is what people need, take it to the market and we will support you with policies.”

The minister explained that he had offered an opinion to NERC and other stakeholders in the power market that reviewing tariffs for the Discos without ensuring that they adequately close up the metering gap in the industry would be unfair to consumers.

Fashola maintained that it was not his job to fix electricity rates, but that his views were based on ensuring that all parties in the industry, operators and consumers, were treated fairly by the market.

“It is not the job of the minister to determine the price of electricity. That is not my work; it is the job of the Nigerian Electricity Regulatory Commission (NERC). The only opinion I have expressed, I think, is that it will be fair to consumers to ensure first that they have meters before you review the rates upwards so that at least people can control what they consume,” said Fashola in the interview monitored in Abuja.

He explained further, “My views have been borne out by the evidence that when people have meters, in some cases, not in all cases, they pay less and they are able to control what they use.

“But the person who has the authority to determine whether electricity price will go up or down is not President Buhari; it is not Vice President Osinbajo; it is not any minister; it is the regulatory agency, the NERC, they fix the price of energy and they do so in consultations.”

Recently, the NERC mandated the Discos to undertake and complete comprehensive enumeration of customers within their networks by March 31, 2019, in preparation for the formal take-off of its Meter Assets Providers (MAP) scheme.

Fashola, however, noted that he had been vilified unfairly by the Discos for actions he had taken in line with the laws governing the sector.

The minister identified such actions he had taken, which were condemned by the Discos to include, the eligible consumers’ regulation and energising education and economy schemes of the Rural Electrification Agency (REA).
He, however, added that the actions were in line with existing laws.

“When I supported the upward review of tariff in 2016, the Discos didn’t complain. It was citizens who complained and so it doesn’t look like I can win here. I thought that a review at that time was appropriate. But when I ask the Discos to do their jobs, I become a bad guy,” Fashola added.

Speaking on the allegations that he eroded the independence of NERC and turned it into a puppet, Fashola stated that when he took charge of the sector, NERC was without a complete board and so could not take policy decisions, hence, his interference on policy direction.

He explained, “I took charge there but there was never a time I assumed the job of the NERC. If you look at the law, you will see that I have powers to give directives to NERC, I do and I have acted within the law.

“I am not under any pressure to deliver projects for campaign promises. We set out a clear plan from when I assumed office, we set our agenda and we have faithfully implemented that agenda. We set out to deliver incremental power, move on to steady power and hopefully get to an uninterrupted power.”

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