The House of Representatives on Wednesday halted the plan by the Federal Government to raise N309 billion from the bond market to finance the shortfalls in the Nigerian electricity market. This resolution was passed following the adoption of a motion sponsored by Rep. Edward Pwajok (Plateau-PDP) seeking the House to halt the proposed plan by the Buhari administration to secure N309 billion from the bond market to cover the market shortfall made up of N187 billion accrued in 2015 and N122 billion projected shortfall for 2016.
Passing the resolution, the House also called on the Federal Ministry of Power, Works and Housing and the Nigerian Electricity Regulatory Commission (NERC), the Nigerian Bulk Electricity Trading (NBET) to immediately stop the move to raise the bond. Moving the motion, Rep. Pwajok expressed concern that the planned massive borrowing was in spite of the intervention by the Central Bank of Nigeria (CBN) in March 25, 2015 through the grant of a bailout.
According to him, the bailout was to the tune of N213billion through the Nigerian Electricity Sector Intervention (NESI) facility, adding that “in spite of that intervention, the shortfall, instead of being wiped out, has continued to escalate at the rate of about N15 billion per month (equivalent to N500 million daily) and rising to a totalmarket shortfall of N400 billion as at December 31, 2015”.
He said that a continuing incidence of market shortfall is a distinctive action for new investors to venture into the Nigerian electricity market and further asserted that the projected expansion in generating capacity would further escalate the market shortfall. The lawmaker alleged that Distribution Companies (DISCOs) which collected revenues failed to remit same in full to other market participants without any measures put in place by the Nigerian Electricity Regulatory Commission (NERC) to block the leakages and penalize defaulters. According to him, in spite of no noticeable improvement in the electricity sector, either in the area of generation, transmission or distribution, electricity tariffs had been increased twice since 2013.
The House therefore, directed NERC to devise a monitoring mechanism to measure and enforce full monthly remittance of revenues by DISCOs and recoup all misappropriated funds that resulted in the accumulated market shortfalls. Furthermore, the House mandated the NERC to sanction any defaulter, including using the threat to withdraw the licenses of erring DISCOs. It thereafter, referred the issue to its committee on power, privatization and commercialization as well as that on aids, loans and debt management for investigation and report its findings within six weeks.