GenCos blames nationwide power outage on N1.6tr controversial electricity debt

Oredola Adeola

Power Generation Companies (Gencos)  have attributed  current load shedding being experienced nationwide to the controversial 1.644 trillion debt owed by the Federal Government between 2013 and 2021. This was revealed by Dr. Joy Ogaji, Executive Secretary,Association of Power Generation Companies (APGC),  in a briefing in Abuja at the weekend.

This is coming few days after the Transmission Company of Nigeria (TCN) blamed the current load shedding being experienced nationwide to the very low power generation by GenCos.

The controversial accumulated debt in question, according to APGC, was as a result of the GenCos’ inability to fully evacuate generated electricity from the national grid, thus causing stranded power of 27,204 megawatts (MW).

EnergyDay gathered through the APGC  that about 25 active GenCos had over 15,000 megawatts (MW) of stranded generation capacity at the end of 2021.

Meanwhile Dr. Ogaji claimed that a situation where the energy dispatched by the power generators was used as an index for power generation capacity was detrimental to their survival.

She said, “We are currently owed N1.644 trillion. One of the reasons that the power plants are down is due to inefficient management of the grid.

“The Gencos have exhausted all their borrowing sources, as the Central Bank of Nigeria (CBN) had reportedly warned the banks to desist from lending money to them.

“If you give us gas, provide forex to carry out maintenance. I have told you most of the units are down and they need money to fix them.

“Give us enough money to pay our gas suppliers because it is pre-payment. But for power, it is take and pay later. There is no way that this misalignment will help us.”

Ogaji noted that the illiquidity caused by the huge sums owed the Gencos by NBET had continued to frustrate them and render them incapable of meeting their obligations.

Ogaji listed foreign exchange as another challenge faced by the hydroelectric power plants, whose concession fees, she claimed were “dollarised.”

She said most of the electricity generated in Nigeria came from gas-fired turbines, explaining that Gencos have consistently been dealing with unending gas-related challenges, which inhibit optimal generation.

According to her, issues of gas volume, gas quality, gas pressure and gas transportation have consistently curtailed capacity utilisation by Gencos thereby affecting generation.

Ogaji said, “Unfortunately, the unenforceable state of the contracts in the NESI and the broken cycle of payment assurance has made the enforcement of what would ordinarily be basic obligations of parties to the industry agreements, impossible.

“Since 2013 when the power sector was partially privatised till date, weak and inadequate infrastructure (transmission and distribution) have continued to render inconsequential, a significant portion of the generation capacities recovered or added by Gencos through huge investments done by them to increase their respective generation capacities.”

According to her, while the owners of the Gencos invested and increased generation capacity up to 13,000MW across the country, no corresponding investment and improvement was made at the transmission and distribution ends. The result, she said, was the significant stranded capacity of Gencos.

Ogaji added, “The persistence of this anomaly over these years, compelled Gencos to begin to question the commercial sense of continued investment in recovery or expansion of generation capacity that would end up being stranded and not transmitted and distributed to end users who are yearning for same.”

She said the foundational agreements, which Gencos were told existed before, no longer exists, after they had commenced performance, with dire implication for power generators.

“We should address the root cause and not the symptoms, for sustainability of the NESI and the power sector.

“The current state of the national grid must be addressed, otherwise we will continue to always deny Nigerians their legitimate expectation of unhindered rights to reliable supply of electricity, the APGC spokesperson said.

The Nigerian Bulk Electricity Trading Company (NBET) in a statement by  Henrietta Ighomrore,Head, Corporate Communication, refuting the claim by the GenCos said only five power generation companies with active Gas Purchase Agreement (GPA) which is active gas supply and transportation contracts, are paid for underutilized capacity.

The  NBET’s spokesperson further said that the Gencos have the capacity to generate 9,000MW are not accurate, as inspections by NBET had shown that the so-called capacity does not exist.

She noted that the Gencos had always been paid as and when due, explaining that in the last payment cycle alone, the Gencos were paid N38 billion for electricity distributed on the grid.

Ighomrore however disclosed that NBET  has paid the Gencos over 90 per cent of their invoices. She claimed that the company paid the generators almost immediately remittances from the Discos were received.

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