Epileptic Power Supply: CBN Engages NNPC, Power Ministry, Others

• As sector gulps N1.3trn in 5 years
• MPC retains MPR at 11.5%

BY EDMOND ODOK – The Central Bank of Nigeria (CBN) is concerned that the over N1.3 trillion disbursed to boost electricity supply in the last five years has not impacted much on addressing the country’s debilitating power challenges.

This is as the apex Bank also announced Monetary Policy Committee (MPC)’s decision to retain the Monetary Policy Rate (MPR) at 11.5 per cent alongside all other parameters.

CBN Governor, Godwin Emefiele, who was voicing his worries against the backdrop of frequent power outages in the country, disclosed the figure after the MPC meeting held in Abuja on Monday.

He told journalists at a media briefing that the apex Bank is stepping up its intervention package in the energy sector and would approach the regulators on modalities for its effective delivery

Emefiele explained that CBN’s intervention in the current scarcity of petroleum products and power outages throughout the country was informed by the MPC’s concerns on the impact of inadequate electricity on domestic prices, noting that “the CBN has always been there to support the power sector” as part of its overall intervention packages aimed at growing the nation’s economy.

Intervention Packages

According to him; ‘’Like you all know, we have disbursed over 1.3 trillion naira 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 so that they can continue to pay for their gas and then the system can continue to operate.’’

Emefiele, who spoke amid Nigerians’ continuous suffering from epileptic electricity supply cum scarcity of petrol to power their homes and businesses, said the bank has so far 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.”

Additionally, he said; “The sum of N12.64 billion was also released to Discos under Nigeria electricity market stabilisation facility phase two line two”, noting that; “Community disbursement under names two, first stand at 232.93 billion naira.

“Both interventions were designed to improve access to capital and ease development of enabling infrastructure in the Nigeria electricity supply chain sector.”

The apex Bank governor said going forward, there would be robust engagement with the Power Minister and Nigerian Electricity Regulatory Commission (NERC) on possible areas of support, adding that the CBN is focused on continuous support for Distribution Companies (DISCOs) in providing stable power supply to Nigerian households and businesses.

“We will be engaging with the Minister of Power, NERC and NBET (Nigerian Bulk Electricity Trading Company) to see whatever we can do to support them.”

Similarly, Emefiele offered the cheering news that the CBN is considering urgent interventions for the Nigerian National Petroleum Corporation (NNPC) to ensure they import adequate petroleum products that would end shortages being experienced in the country.

He said the Minister of Finance is engaging with Monetary Policy Committee (MPC) on how to ensure adequate funding provision to make petroleum products adequate and available in the country.

On the persistent endless fuel queues in Abuja, despite assurances from the NNPC, the CBN governor said; “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.

“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.”

He said; “When arbitrary price reduces, of course, we can begin to see that there will be gradual moderation in the price of this product. 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. This is simply how we think CBN can work with them.”

However, he charged the oil giants to take urgent steps in ensuring adequate supply of petroleum products across the country in order to check the rate of arbitrary increase in price of this petroleum products by oil marketers as well as the untold hardships being suffered by Nigerians

Also noting the unprecedented rate of oil theft witnessed in recent times and its debilitating impact on government revenue and the nation’s reserve, Emefiele said; “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.”

He further said; “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.

“MPC advises the CBN management and fiscal authorities to take specific and urgent action to avoid many power generating stations shut down for turnaround maintenance, resulting in the current unwarranted shutdown of our generated assets.”

MPC’s Verdict On Policy Rates

On MPC’s decision to maintain the MPR and other policy rates, the CBN Governor said: “In its consideration as to whether to hold, tighten, or loosen, MPC remained concerned that the global situation on rising prices may continue in the near term but may begin to moderate if deliberate and urgent actions are taken by both the monetary and fiscal authorities to correct the rising inflation.

“On another hand, Committee was satisfied that the use of the Bank discretionary CRR policy should be deployed more aggressively to control the level of money supply in the economy.”

Continuing, he said MPC’s moves on tightening the noose to rein in the rising price level was based on the fragile state of the current GDP growth and the potential external and domestic headwinds from the Russia-Ukraine war, noting that “a contractionary policy stance would stifle the expected investment expansion needed to drive growth and absorb the shocks in Nigeria.

“MPC also feels that not only would tightening reverse the steady improvement recorded in credit expansion, it is also of the view that tightening would not necessarily tame the inflation, particularly where the marginal decline is relatively not yet sustainable. In the case of whether to loosen, the Committee feels that loosening would trigger further liquidity surfeit and fuel inflationary pressure as available funds outstrip the economy’s absorptive capacity.”

For Emefiele, “MPC also feels that loosening would trigger FX demand pressure, as the excess liquidity would exert demand pressure on the FX market and trigger a naira depreciation which would also fuel inflation.

“Based on the foregoing, the Committee decided to adopt a hold stance as it would indicate a precautionary and consistent policy stance with the prevailing economic conditions particularly as further economic and financial shocks are exerted from the ongoing Russia-Ukraine war.”

On a general note, the Emefiele said the apex Bank management is focused on improving CBN’s interventions in order to increase food production and grow the economy through various investments in other real sectors of the economy.