NBET’S IMPLEMENTATION OF THE POWER SECTOR RECOVERY PROGRAM (PSRP)
The Nigerian Bulk Electricity Trading Plc. (NBET) is at the core of the implementation of the Power Sector Recovery Program (PSRP); which is a series of policy actions, regulatory, operational, governance and financial interventions being implemented by the Federal Government of Nigeria (FGN) to improve electricity supply, strengthen financial and fiscal sustainability, as well as enhance accountability in the Power Sector in Nigeria.
The Power Sector Recovery Program (PSRP) aims to:
- Restore the sector’s financial viability;
- Improve power supply reliability;
- Strengthen the sector’s institutional framework and increase transparency through the publication of key operational and financial data;
- Implement clear policies that promote and encourage investor confidence in the sector; and
- Establish a contract-based electricity market
Included in the PRSP are comprehensive financial packages (Interventions) which are aimed at eliminating sector deficits through the clearing of both historical and future sector shortfalls by:
- Establishing a sustainable and appropriate electricity tariff.
- Dimensioning and committing to fully-funded projected sector deficits due to future tariff shortfalls until cost recovery is attained.
- Clear historical deficits (2015-2019) due to tariff shortfall as part of the financing plan.
- Secure financing sources and enforce payment discipline throughout the supply chain until the sector becomes self-sustaining financially.
- Clear historical MDA debts and automate future payments
These financial interventions have been structured into what the program calls a “Financing Plan”. This Plan identifies the sources of funding and details the specific purpose and usage of the fund.
In terms of the implementation of the Power Sector Recovery Operation (PSRO), NBET is charged with the responsibility of receiving monies from all sources of funds to execute the approved Financing Plan i.e., make regular (monthly) payments to GENCOs for the tariff shortfall portion of the GENCOs invoices (both new and historical arrears) and make payments towards the CBN-PAF Facility.
The Financing Plan is anchored on two planks:
- Sources of Funds – Where the monies are accessed from.
- Uses of Funds – What they would be used to pay for
The Sources of Funds comprise the following:
- FGN Appropriation/Contribution: The Federal Government approved funding envelope commitment as required to meet its obligation to the PSRO program. This is an annual budgetary allocation from the FGN budget appropriation for offsetting the tariff shortfall component of the invoices issued monthly by respective Generation companies (GenCos)
- World Bank PSRO Loan: The World Bank’s $750 million PSRO loan was assessed based on meeting the program’s Disbursement Link Indicators (DLI).
- CBN Payment Assurance Facility Expansion Balance of PAF II: This is the balance of the extended N600 Billion Payment Assurance Facility from the Central Bank of Nigeria (CBN) used to complement Discos’ remittances to NBET and fund most of the tariff shortfalls from 2017 to the first half of 2020. This was further aimed at providing shore up for Energy Payments to Generation companies (GenCos) on the national grid.
The Uses of Funds are broken into:
- Historical Tariff Shortfall: the financial interventions of the PSRP aim to fully fund the shortfall covering the period 2015 – 2019 as a means of offsetting the debt burden on the Discos’ balance sheets.
- Ongoing Tariff Shortfall: Full funding of new tariff shortfalls is given priority under the PSRP. There is a provision for annual financing of tariff shortfalls of the sector from 2020 onwards so that no new arrears are accumulated.
- PAF I & II Debt Service Repayment: This includes the full payment of both principal and interest due on the facility.
- Contingency: This caters for short term eventualities that affects the plan.
- 2020 Generation Companies Tariff Shortfall Payment: This is a payment towards the tariff shortfall of the GENCOs from the sources of funds.
- GENCOs Payment Performance: This is the percentage of the GENCO’s invoice that has been paid.
View PSRO Payment:
For the year 2020