Nigerian power sector viable, says Minister
By Obas Esiedesa
POWER generation companies (GenCos) were paid just half of their total invoice to the Nigerian Bulk Electricity Trading Plc (NBET) for power supplied to the National Grid in the first nine months of last year.
Industry data released by the Nigerian Electricity Regulatory Commission (NERC) showed that the GenCos were paid N311.06 billion out of the total invoice of N614.58 billion, representing 50.61 percent.
This was however an improvement compared to what the GenCos received over the same period in 2020 where NBET paid just 24.03 percent (N136.03 billion) of the N569.14 billion invoice sent in by the power generators.
A monthly analysis of data on NBET payments to GenCos from January to September 2021 showed that the electricity bulk trader paid N37.04 billion or 51.9 percent of the N71.37 billion invoice for energy supplied in January 2021.
The GenCos got N26.19 billion representing 39.6 percent of the N66.15 billion invoice sent to NBET for energy supplied in February 2021. The payment for power supplied in March was N35.78 billion or 51.9 percent of the N68.89 billion invoice sent to NBET.
Also, NBET payment for energy supplied in April was N39.46 billion representing 56.6 percent of N69.65 billion sent in by the GenCos. For May, NBET paid the GenCos N40.54 billion or 55.3 percent of the N73.30 billion invoice for energy supplied.
In June, 2021, the GenCos were paid N31.88 billion or 48.1 percent of the N66.20 billion invoice sent to NBET for energy supplied to the national grid. Also, NBET paid the GenCos N36.03 billion or 52.4 percent of the N68.71 billion invoice for energy supplied in July 2021.
In August, the GenCos were paid N31.14 billion representing 46.4 percent of the N67.16 billion invoice sent to NBET, while in September the GenCos got N32.99 billion or 52.2 percent of the N63.15 billion invoice sent to NBET for energy supplied.
Payment depends on DisCos remittance – NBET
The NBET implements the Minimum Remittance Order issued by the Nigerian Electricity Regulatory Commission (NERC) to all electricity distribution companies (DisCos), which sets the minimum percentage payment each DisCo is to remit to NBET monthly.
It is from the DisCos’ remittances that NBET pays the invoice sent in by the GenCos.
NBET in a statement in Abuja by Head, Corporate Communications, Henrietta Ighomrore said it would continue to deploy strategies and initiatives to enhance the market liquidity in the sector through improving payments to the generation companies, further supported by its power sector reform program and the market discipline committee.
NBET had in 2016 conceptualise and began the implementation of its N701.9 billion Payment Assurance Facility (PAF), when generation capacity was greatly threatened due to shortage of gas and the inability of some power generation companies to meet their immediate obligations.
NBET explained that the PAF was efficiently managed and disbursed from January 2017 till December 2018, and resulted in a quantum leap of 6500MW generation capacity to a 7659MW at the end of the PAF.
The success of the N701.9 billion PAF led to sustainable generation capacity and increased available electricity, this success led to the birth of PAF 11.
The implementation of PAF 11 which is N600 billion facility was implemented for 2019/2020, and later metamorphosed into the Power Sector Reform Program.
“NBET has consistently demonstrated efficiency and transparency in the administration of the financial flow”, the company added.
She further stated that NBET is committed to ensuring timely and efficient payment to GenCos to enable the generators to fulfill their obligations and maintain sustainable supply of electricity to the grid.
Ighomrore stated that NBET is engaging with all stakeholders in the value chain to ensure payment improvement and viability of the Nigerian electricity market.
Sector’s viability not in doubt — Minister
Despite the obvious poor financial state of the Nigerian Electricity Supply Industry (NESI), the Minister of Power, Engr. Abubarkar D. Aliyu has insisted that the financial viability of the sector was not in doubt.
Speaking at a power correspondents’ event in Abuja, Engr. Aliyu said the Federal Government was reviewing the sector with the intent of making needed changes to grow the industry.
According to him, “to make the long term changes that will move the sector forward, we are presently looking at the Electric Power Sector Reform Act, 2005 (EPS), and reviewing aspects that constitute stagnation to the Sector.
“The whole essence of this is to achieve good quality, stable, reliable and affordable electricity in Nigeria, which is indeed the yearning of the good people of Nigeria. The right policies, when carefully implemented and monitored, with constant reviews and checks, will lead us to our desired Sector growth.
“During my watch as a Minister, I will always ensure that the conversation and growth path strategies are discussed and adopted, after careful reviews and possible outcomes. We are aware that the Power Sector is made up of both government and private sector players. The plan of the government is to ensure that all players focus on the big picture with a proper alignment to achieve the desired growth. The primary purpose of government is to develop policies and laws and to properly orient the players”.
He explained that one of his “cardinal goals, on the assumption of office, is to reduce or totally eliminate the human factor issues limiting the growth of the sector. It is important to note, as I have observed that the viability of the sector is not in doubt.
“We just need to boldly deal with some challenges militating against the desired growth, some of which are Transmission and Distribution bottlenecks, funding difficulties, Transmission wheeling inadequacy, old and dilapidated distribution infrastructure.
“Others are confidence in the electricity market, energy losses, non-payment of electricity bills and lack of transparency within sector players, amongst others,” he added.