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Intervention fund: FG pays N252bn to GENCOs in seven months – Investigation

THE Federal Government has disbursed about N252 billion to the electricity generation companies, GENCOs for power generated within seven months (January to July 2017).

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Investigations by Sweetcrude showed there was a monthly shortfall of 20 per cent plus the arrears in payment for 2017 as the GENCOs which issued an average monthly invoice of about 36 billion per month were paid just 80 per cent.

A source in one of the GENCOs who preferred not to be named because he was not permitted to speak said that the government has about N449 billion to remit to the GENCOs, excluding over N500 billion 2016 debt.

Executive Secretary of Association of Power Generation Companies, APGC Joy Ogaji, said this has impacted negatively in the operations of the GENCOs.

According to her, “The impact of the ever spiralling debt on the books of the GENCOs’ operations cannot be over- emphasized. GENCOs are unable to perform required and scheduled maintenance as well as pay for gas supply and meet their obligations to their lenders. Without pragmatic measures in paying all their outstanding debts (backward, forward and futuristically), development would remain slow.

“The government as part of measures to solve the problems came up with the concept of eligible customers as veritable option for improved market liquidity.

“It is imperative to state that as prudent as this concept is, it may not be enough to close the revenue gap in the market poor remittance and non-performance. Liquidity squeeze in the sector is a major hurdle hampering continued and sustainable supply of electricity.”

Ogaji, however, called on the Federal Government to as a matter of urgency restore sanity to the sector by ensuring it plays its roles as stipulated on the privatisation agreement. “Generation Companies are not asking for handouts from government to perform their contractual obligations.

They expect that 2018 comes with an improvement in the financial viability of the electricity supply value chain in order to ensure the improvement of the electricity service delivery which will provide the landscape for a sustainable incremental power.

“The government should capture all debts owed to GENCOs (outstanding and forward looking) in its line item in the budget for debt servicing. NBET is a government agency with a contract to pay GENCOs 100 percent, default leads to accruals of interest which will further increase the debt profile and hamper its incremental power mantra.”

FG’s pronouncement

It would be recalled that the Federal Executive Councils (FEC’s) approval of the payment assurance to the GENCOs to the tune of 701.9bn on the 1st of March, 2017 was welcomed by the generation companies and other stakeholders.

The Minister of Power, Works and Housing, Mr. Babatunde Fashola reportedly said that “The liquidity problems that have characterised the market have affected the Nigeria Bulk Electricity Trading (NBET’s) ability to deliver on its PPP obligations to the GENCOs. So going forward in order to strengthen the NBET, CBN is providing a payment assurance guarantee for energy produced by any GENCOs, so they can pay their gas suppliers when they are paid so that the Hydros can continue to operate.

“What we seek to achieve here is to bring some stability to the production side of the power value chain and also give confidence to investors who want to come in, who are concerned about how “.

This is due to the fact that the GENCOs are being owed over 500 billion naira for electricity generated and supplied prior to 2017. Due to high market Liquidity squeeze, GENCOs lack the necessary funding for their operations, acquiring spare parts and equipment for the power generation stations.


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