April 21, 2024

 Bankruptcy looms in Nigeria’s electricity market, as FG owes GenCos N1.75 trillion

Oredola Adeola

The rapid prospect of Nigeria’s electricity market slumping into bankruptcy has become more certain with debts rising to all time level of N1.75 trillion and with no visible  respite in view.

Dr. Joy Ogaji, Executive Secretary, Association of Power Generation Companies (APGC), made this known in her remark while speaking on behalf of the electricity Generation Companies(GenCos), during a panel session at the Association of Energy Correspondents of Nigeria (NAEC) Conference, held on Thursday in Lagos.

The ES, APGC, during the discussion session on the topic: “Power Sector Dilemma: Issues, Challenges, Opportunities, and Key Strategic Solutions, claimed that the liquidity challenge of the Nigerian Electricity Supply Industry (NESI) has made operating in the generation value chain very difficult for companies.

EnergyDay gathered that NBET owed GenCos, 214.93 billion in 2015; N273.32 billion in 2016; N236.47 in 2017, N264.08 billion in 2018, and N256.97 billion, N266.01 billion, and N120.25 billion in 2019,2020 and 2021, respectively, while the balance of N110million represented the figure for 2022.

According to the Chief Scribe of power Producers, a staggering sum of N1.75 billion has been incurred by operators over the last ten years.

The above figure based on EnergyDay’s check does not include liabilities from other value chain operators such as the Transmission company of Nigeria (TCN) and the Electricity distribution Companies of Nigeria( Discos)

Ogaji said GenCos were ready to generate the power needed in Nigeria, but utilization had stagnated in the country for a long time due to transmission and distribution constraints.

“Just to give you a context, on Nov.1, 2013, when the privatization took place, power was 3,427MW on the day of the takeover.

“On Dec. 1, 2013, power had gone from 3,427MW to over 4,003MW and by 2020 it had gone up to nearly 8,000MW. The average uptake of power from the GenCos was about 4,000MWh from 2013 to date, which was not good for business.

“So, this does not encourage any investor to keep investing because, clearly, it shows that your product is not needed.

“Notwithstanding what Nigerians are always saying in cliches, “Give us Power”,  generation production is driven by demand and supply mechanisms.

“When the demand is not moving in line with the production, the producer is not incentivised to produce and this is a major problem,” the spokesperson of the GenCos said.

She further disclosed that lack of access to foreign exchange by GenCos, has become a major challenge to their operations in recent times.

Ogaji however noted that the GenCos are currently owing their gas suppliers about N1 trillion and also servicing loans used for the acquisition of the companies in 2013.

She said the Nigerian Bulk Electricity Trading Company (NBET) needs to intensify efforts to ensure remittances by the 11 electricity distribution Companies for energy consumed by their customers.