The Central Bank of Nigeria (CBN) on Tuesday, November 18, 2014 formally signed a N36.5billion agreement with gas suppliers and power generation companies that would settle all gas-to-power debts that have stunted the growth of the power sector.
The package which is part of N213billion arrangement by the Federal Government to inject liquidity into the power sector, also included an agreement between the CBN and the eleven (11) electricity distribution companies for deal worth about N176.5billion to cover revenue shortfalls in the power supply chain in the past one year.
Unveiling the agreement which was first announced about two months ago, Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke said
"The process for the intervention started with an increase in gas to power price to levels considered more commercial than before, and legacy debt of about N36.5b owed to gas suppliers by the power sector over the past few years is now being settled through the CBN led intervention scheme. With the intervention, all undisputed claims are settled creating a new page in Nigerian domestic gas market, and it is expected that appropriate security mechanisms will be put in place to assure that gas sold to power sector, gets paid for, thereby creating a viable and sustainable gas sector. However, that today's intervention is also complemented by a reciprocal commitment by the gas suppliers, with a medium term gas supply commitment from the various gas suppliers is also made today".Aside the eleven (11) distribution companies and the power generation companies, other firms involved in the agreement include, Chevron, Total, Shell, Seplat, PanOcean and NPDC among others.
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