The House of Representatives has opposed fresh plans by the Federal Government to float a bond of N309bn to finance the power sector, which is already 60 per cent private sector-driven.
The Federal Ministry of Power, Works and Housing is believed to have concluded plans to use the Nigeria Bulk Electricity Trading Company to raise the bond.
According to the house, government’s decision was to use the bond to “cover the market shortfall made up of N187bn accrued in 2015 and N122bn projected shortfall for 2016.”
In a resolution following a motion moved by Mr. Edward Pwajok, the House expressed surprise that the government was securing another bond soon after the Central Bank of Nigeria provided an intervention fund of N213bn for the power sector.
“The House is also worried that in spite of that intervention, the shortfall, instead of being wiped out, has continued to escalate at the rate of about N15bn per month (equivalent to N500m daily), rising to a total -market shortfall ofN400bn as of December 31, 2015,” the resolution added.
Pwajok noted that the idea of borrowing to fund shortfalls would discourage new investors from putting their money into the sector.
He argued further, “Market shortfall is a disincentive action for new investors to venture into the Nigerian electricity market, the implication being that the projected generating capacity expansion is an illusion since any increment in generating capacity would further escalate the market shortfall.
“Also concerned that the Discos, which collect revenues, fail to remit in full to other market participants, without any measures put in place by the Nigerian Electricity Regulatory Commission to block the leakages and there are no sanctions/penalties for defaulters.
They however observed that the idea of using Nigeria’s collective wealth to fund the sector that only increased tariff but supplied low electricity was not their idea of a privatised power sector.
