CBN unveils conditions for accessing Electricity Stabilization Fund

CBN unveils conditions for accessing Electricity Stabilization Fund

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The Central Bank of Nigeria (CBN) has unveiled the terms and
conditions for accessing the N213billion Electricity Market Stabilisation
Facility (CBN-NEMSF) which was recently approved for the power
investors.
The CBN said the facility has a tenor of 10 years, with moratorium
period of 12 months on the principal.
The bank in a 20-page document posted on its website yesterday,
explained the mode of funding the facility, saying that it subscribed to
a note issued by the refinancer in the total sum of the facility amount.
Furthermore, it demanded that the refinancer shall refinance the
facility by repaying the lenders in proportion to each lenders’
commitment, in accordance to the Disco Disbursement Refinancing
Agreement and the amended and restated Disco Disbursement
Agreement.
“The facility will attract an all-inclusive charge of 10 per cent per
annum on the outstanding balance and payable monthly in accordance
with the transaction document,” it stated.
According to the document, the terms and conditions shall remain
effective until full payment of the facility.
“The security to be provided for the CBN-NEMSF shall be by way of a
declaration of trust as set out in the amended and restated Disco
Disbursement Agreement, over the line item in the invoices issued by
the Disco representing the collection of the facility which has been
provided in the MYTO 2.1 for the repayment of the facility and an
obligation on the Discos to ensure such collections,” it added.
Following the handover of the PHCN successor companies to private
investors in November 2013, the Nigeria Electricity Supply Industry
(NESI) was laden with liquidity challenges as a result of several
factors including insufficient gas supply and higher baseline aggregate
technical commercial collection losses than what was assumed under
the MYTO two.
This necessitated the central bank, in pursuant the CBN Act 2007 to
invest in the refinancer to be set up to provide the facility.