By Adewale Sanyaolu
The fiscal authorities have assured of liaising with the Central Bank of Nigeria (CBN) to ensure that foreign exchange allocation to the power sector is prioritised.
Minister of Power, Mr. Adebayo Adelabu, gave the assurance during a working visit to the Egbin power plant in Ikorodu, Lagos recently.
‘‘One of the reasons I came here is to see how we can support our power generating plants to strengthen their output. We know that forex sourcing has been a major constraint to effective maintenance and sustenance of the facility.
“I have seen what you have on ground now and the critical need for spare and tools replacement. We would liaise with CBN to prioritise FX allocation to the power sector as this would ensure that we are able to ramp up capacity in terms of generating output.
“The foreign exchange constraint is not only peculiar to your power plant, it’s across all the generating plants. They need forex for them to be able to maintain the turbines and replace the tools and spares, and this has been a major issue. I am going to take steps to ensure I liaise with the foreign exchange authority in CBN to see how they can address this,’’.
Players in the sector are grappling with repaying foreign currency loans borrowed when the exchange rate was more than three times its current value.
According to sources with knowledge of the issues, some investors are tethering on the edges of default as they struggle to find forex to repay loans from an investment that has been a colossal loss.
They also face the daunting task of funding CAPEX hugely required to improve the state of power supply in the country mostly in dollars.
According to a power sector analyst, Bayode Akomolafe, power transformers, distribution transformers, electrical conductors, meters, and most of the technological solutions required to deliver stable power are mostly imported.
Akomolafe disclosed that the electricity industry is highly dependent on the direct importation of goods and services as the local supply chain is not robust enough to support the high technology (hi-tech) products needed to ensure the reliability and availability of power in the value chain.
According to him, importing raw materials is also necessary for the limited local supply chain that supports the sector.
But for being magnanimous enough to continue operating and generating power despite the challenges, Adelabu assured that all impediments to the smooth operation of the power plant, especially gas related hurdles would be addressed.
Admitting that gas constraints had been an impediment to almost all the power plants, the minister informed that his ministry had already had conversation with the Minister of Petroleum (Gas) to try to resolve the gas to power supply challenge.
He said the government was also meeting with the gas suppliers to plead with them to understand that the government was prepared to start paying down all the debts owed them.
“Like I mentioned earlier, we are going to make some cash injections in terms of payment. We are going to give them some guarantee debt instrument, and we are also looking at ways of allowing them access to Nigeria gas wells which would be used to defray the outstanding debt of gas suppliers.
“We would start seeing the impact in April when we start paying these loans, I’ve had meetings with the Minister of finance and minister of budget planning and they have given me the promise that we are going to look for funds to start paying these,” Adelabu stated.
He described Egbin Plant as the best power plant in sub-Saharan Africa with six turbines of 1,320mw, noting that the plant was established 40 years ago.
He expressed his excitement about the maintenance culture of the power facility, which he said, was the result of the huge investment made by the present owner to sustain the plant and ensure it continues to produce and generate power on a continuous basis.