Experts have said that the Nigerian power sector would have since collapsed due to illiquidity, but for the timely financial interventions made by the Central Bank of Nigeria (CBN) to the tune of over N1.3 trillion.
The Nigerian power sector was partially privatized eight years ago but has since struggled financially due to the poor performance of the sector, suppressed tariff and the sheer lack of infrastructure at both the transmission and distribution ends.
According to data obtained from industry, the financial liquidity present in the power sector has now risen to around N4 trillion as CBN, along with the Federal Government had to introduce multiple interventions in order to help the sector avoid the collapse which was looming ahead.
The apex bank launched the Power and Aviation Intervention Fund (PAIF), which sat around N300 billion, Nigerian Electricity Market Stabilization Facility (NEMSF) at about N213 billion, a Solar Connection Intervention Facility worth N140 billion, a tariff shortfall intervention of more than N600 billion and a more recent N120 billion intervention designed for mass metering.
The Federal Government had also released N600 billion for the power sector so as to rectify the deficiency in the payment of monthly invoices by important stakeholders in the sector. There was also another N701 billion CBN facility deployed in March 2017 as a Power Assurance Guarantee.
Last year, the apex bank gave the directive to Deposit Money Banks to take control of the collection of electricity bill payments. A circular which was signed by the director of banking supervision, Hassan Bello linked the directive to the recommendation of the Power Sector Coordination Working Group to improve discipline in payment in the Nigerian Electricity Supply Industry (NESI).
Talking about the undependable financial situation in the power sector, former Chairman of the Nigeria Electricity Regulatory Commission (NERC) said that the intervention was highly important, and that the commission was useful to the overall success of the financial intervention.