The Federal Government of Nigeria says it will offset the 25 billion Naira owed companies that supplied gas to privatised independent power plants.
It says the funds will be provided by the Central Bank of Nigeria (CBN).
The Minister of Petroleum Resources, Mrs 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 on Saturday at a joint briefing by the Ministers of Petroleum and power, the CBN Governor, and the chairman of the Nigerian Electricity Regulation Commission.
They told reporters that the stakeholders in the power sector had come together to form a synergy that would empower them to solve the problems in the power sector.
Mrs Alison-Madueke pointed out that inadequate gas supply to power plants had been a major challenge to the Federal Government’s power sector reform.
“Inadequate gas supply has been ongoing for almost 20 years or more and it was inherited by this administration. Since we came in, various interventions have been put in place to bridge the supply challenge.
“Although gas supply has grown significantly in the last two years, to about 1.5 million cubic feet per day, demand growth continues to outgrow supply, creating a short term gas supply crisis,” she said.
With the government making necessary efforts, the independent power plants have a burden of paying hugely for the supply of gas for the plants to meet the 2014 target of six thousand megawatts, up from current 4000 megawatts.
She said that the government had been working tirelessly to bring about a robust and sustainable solution to the critical issue.
Had there been sufficient gas supply in Nigeria, current generation capacity would have crossed the 6,000 megawatts target by today,” the Petroleum Minister said.
From the meeting, it was obvious that it has taken an inter-agency collaboration to resolve the financial challenge of gas supply to the plants.
The CBN governor said that the Federal Government would be paying the debts when the power plants have been privatised.
This raises the question of whether subsidy has been introduced into the power sector.
But the Minister of Power, Professor Chinedu Nebo, stressed that the government was involving more private companies in the process to increase the generation of electricity in Nigeria. He pointed out that the demand far exceeds the amount of electricity generated in Nigeria, emphasising that the challenges had led to the establishment of the synergy between the stakeholders in the power sector.
“If the synergy between the stakeholders had existed in the past several years, there would not have been cause to worry over the gas situation today,” he said.
According to him, the government has set a generation target of over 15,000 megawatts by the end of the year using gas, solar and hydro energy power plants.