Musings on Emefiele’s CBN and power sector interventions

Mr. Godwin Emefiele

“One of the tests of leadership is the ability to recognize a problem before it becomes an emergency”. –Arnold Glasow.

An old report by a national daily that Nigeria’s national grid had once collapsed 15 times in one month was as appalling as it is always scary. The nation’s electricity supply has been going from bad to worse and has had a chilling effect on both large corporations and small-scale businesses. The troubled energy sector, too, has been creating jaw-dropping concerns among Nigerians at all levels. It should also not be difficult to imagine how much this has crippled the national economy. While some Nigerians grumble over this seemingly endless tale of woes, there seems to be light at the end of the tunnel. Governor of the Central Bank of Nigeria, CBN, Dr. Godwin Emefiele, and his lieutenants would not grumble or lament, they thought about a viable way out of the electricity and fuel supply crises with a N1.3trillion intervention, among other disbursements.

Emefiele’s CBN has also considered a number of important statistics, to arrive at the N1.3 trillion support for power supply. Let us examine a few of the facts and figures on the nation’s debilitating electricity power supply, prior to the CBN intervention.

Nigeria ranks 171 out of 190 nations in the realm of access to electricity, according to the World Bank. Nigeria’s grid has an installed capacity of roughly 12,522 megawatts, but due to poor infrastructure, it is only able to deliver around 4,000 megawatts most days, according to the US Agency for International Development, USAID.

At a point, 43 percent of our citizens had no access to on-grid electricity, according to the World Bank, and Nigeria loses $26.2bn annually (the equivalent of two percent of its gross domestic product) due to the lack of reliable electricity.

So, the CBN’s swift intervention in electricity supply came by way of disbursement to the tune of over N1.3 trillion to support in the last five years.

Hear what the CBN governor told a meeting of Bankers’ Committee: “So, what we are trying to say here is that the CBN has always been there to support the power sector. Like you all know, we have disbursed over N1.3 trillion in the last five years to support through the generators or Discos; or to acquire equipment or to buy meters; or to improve what is being paid to electricity generating companies”.

Emefiele also reasoned that with such a funding support, “they can continue to pay for their gas and then the system can continue to operate.’’

Is that the only step so taken by the Emefiele-led management? No. Records indicate that the bank had also disbursed N11.11 billion to power sector players under the Nigeria Bulk Electronic Trading Payments Assurance Facility, bringing the cumulative disbursement under this facility to N1.28 trillion.

He revealed details of another layer of the disbursements: “The sum of N12.64 billion was also released to Discos under Nigeria Electricity Market Stabilisation Facility Phase Two and Line Two.

Going a notch further, the CBN has it on record, that community disbursement under names two, first stand at N232.93 billion.

The CBN governor sums up the ultimate objective: “Both interventions were designed to improve access to capital and ease development of enabling infrastructure in the Nigeria electricity supply chain sector”.

It is therefore glaring, that the apex bank’s commitment to continue to support Distribution Companies (DISCOs) to provide stable power supply to Nigerians is never in doubt.

Interesting too is the news that the apex bank would be engaging with the office of the Minister of Power and the Nigerian Electricity Regulation Commission, NERC, to see what extramile the apex bank could go, to support them.

Talking about power, it does not end with electricity supply alone. Even the supply of petroleum products to run machines is a necessary requirement for boosting a nation’s economic fortunes. Long fuel queues are not just an embarrassment to Nigeria’s domestic and international image but cog in the wheels of her economic stability. I read elsewhere that Emefiele was quoted as saying that the bank would be providing interventions for the Nigerian National Petroleum Company, NNPC Ltd to ensure they import petroleum products that would end the shortage in the country.

In fact, he went on to indicate that the minister of finance was holding engagements with the Monetary Policy Committee (MPC) towards ensuring adequate funding to make petroleum products adequately available in the country.

In one of the reports on petroleum products supply as one of the troubles of the energy sector, Emefiele was said to have disclosed: “We are also saying we will be engaging NNPC ourselves, if there’s any kind of intervention that we can provide to help make it easy for them to bring in these products, so that this shortage can stop.”

He goes further: “Then we will see that when supply increases, people are relatively confident that when they sell whatever they’re holding, be it petrol or diesel, that they can easily go and replace them, then the arbitrary price increases will reduce.” And what happens next?

Hear him: “When arbitrary price reduces, of course, we can begin to see that there will be gradual moderation in the price of these products. This would ultimately result in the moderation in the prices of other products that its price would have gone up as a result of the arbitrary increase in the price of these items.”

He also shared stakeholders concern over the oil theft recorded in recent years and its debilitating impact on government revenue and the nation’s reserve. And what is exactly the hope of Monetary Policy Committee (MPC), regarding the protracted challenges in the energy sector, according to Emefiele?

“In the medium term, MPC is hopeful that a proposed take-off of the Dangote Refinery in the course of the year would help to improve the supply of petroleum products in Nigeria. MPC also noted that the rising price of diesel is compounded by the problem of inadequate electricity supply in Nigeria, which has adversely impacted domestic prices.”

To most observers of the crisis in the energy and power sector, the admonition by MPC to the CBN was as timely as it was necessary. It reportedly advised the CBN management and fiscal authorities to take specific and urgent action to ensure that power generating stations never shut down for turnaround maintenance, resulting in the current unwarranted shutdown of the nation’s generated assets.

It has now become abundantly clear, the CBN under Dr. Emefiele’s stewardship has given priority attention to intervention in areas of great concern to Nigerians. Interventions by the current CBN management has thus far been quite helpful to addressing some of our most-pressing national problems. There are challenges that have been with us for decades, which successive governments in the country merely paid lip service to. This culture of inaction on the part of Nigeria’s economic policy managers has now been wiped clean by Emefiele’s CBN and Nigeria has cause to cheer, that we are getting somewhere fast.

Dambatta, a veteran journalist, writes via [email protected]

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