In a bid to ensure accountability in the implementation and execution of the Central Bank of Nigeria’s Nigeria Electricity Market Stabilisation Facility (CBN-NEMSF), the banking sector watchdog has unveiled the terms and conditions for the facility.
The N213 billion facility, recently approved for the power investors, has a tenor of 10 years, adding that there shall be a moratorium period of 12 months on the principal.
In a 20-page document posted on its website yesterday, the CBN 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.
It further stated that the refinancer shall refinance the facility by repaying the lenders in proportion to each lender’s 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 added.
The terms and conditions, according to the document, 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 fraught with liquidity challenges arising from several factors including insufficient gas supply and higher baseline aggregate technical commercial collection losses than what was assumed under the MYTO two.
To this end, the central bank, in pursuant the CBN Act 2007 indicated its desire to invest in the refinancer to be set up to provide the facility.