Electricity, TCN, power sector

–Say debts date back to 2015

–NBET disputes figure, questions motive

–Generation plummets to 1,393MW

By Obas Esiedesa

As the energy crisis facing the country deepened at the weekend, power generation companies in Nigeria (GenCos) have attributed low electricity generation to the National Grid to the N1.644 trillion owed them by the Nigerian Bulk Electricity Trading Plc.

The GenCos which spoke under the aegis of the Association of Power Generation Companies (APGC) said the amount which came as a result of unused capacity dates back to 2015.

Speaking to journalists in Abuja yesterday, APGC Executive Secretary, Dr. Joy Ogaji accused NBET of failing in its obligations to the GenCos as contained in the Power Purchase Agreements (PPA).

Dr. Ogaji who gave a breakdown of the debts, said NBET owed the GenCos N214.93 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.

The figures were however disputed by NBET which claimed that not all GenCos were entitled to unutilized capacity payments.

As the operators and the government agencies continue to bicker, power supply has remained abysmally low in the past three weeks. Checks by Vanguard showed that as at 5pm yesterday, national grid supply was just 1,393.40 Megawatts with only nine plants generating to the grid.

Dr. Ogaji at the briefing explained that the huge debt was making it difficult for the power generation companies to operate and maintain their plants, stressing that if the debts were paid, the GenCos could generate 9,000MW immediately.

According to her, the “illiquidity caused by the huge sums owed GenCos by NBET, has more than ever before continued to frustrate the GenCos and kept them incapable of meeting their obligations which are extremely necessary to keep their power plants running and make capacities available, while observing required Health, Safety and Environment (HSE) standards. Such obligations include our operations and maintenance (O&M) as and when due, procurement of critical capital, spare parts and accessories, payment, and servicing of existing loans from lenders and financiers, employee obligations, etc.

“Recently, GenCos cried out to the authorities and are still looking forward to a favourable consideration of their pleas for foreign exchange support to enable them to procure critical spares for their turbines and equipment to keep them in good state of repair. This is in addition to the FX challenges faced by the Hydros, whose concession fees are dollarized”.

She added: “Most of the electricity generated in Nigeria, about 80 percent, come from gas-fired turbines. Natural gas is the feedstock or fuel of these plants. GenCos have consistently been dealing with unending gas-related challenges which inhibit optimal generation. Issues of gas volume, gas quality, gas pressure and gas transportation have consistently curtailed capacity utilization by GenCos thereby affecting generation.

“These issues need to be addressed and urgently too, as the GenCos have always requested. Unfortunately, the unenforceable state of the contracts in the NESI (Nigerian Electricity Supply Industry) and the broken cycle of payment assurance have made the enforcement of what would ordinarily be basic obligations of parties to the industry agreements, impossible”.

In its reaction, NBET disputed the figures quoted by the GenCos, saying only companies with active gas supply and transportation contracts were paid for unutilized capacity.

The Head Corporate Communication, NBET, Henrietta Ighomrore explained to Vanguard that in the country only five power generation companies with active Gas Purchase Agreement were paid for unused capacity.

According to her, claims by Dr. Ogaji that the GenCos have the capacity to generate 9,000MW were not accurate as inspections by NBET have shown that the capacity does not exist.

She said: “On the issue of capacity payments, the contract documents are very clear on how it is treated. All GenCos get paid for the associated capacity on energy delivered to the national grid. Only GenCos with active PPAs get full capacity payment based on their active gas contracts.

“You are well aware that active gas contracts are associated with the take and pay obligations, which come with more financial exposure and responsibilities. Nonetheless, the Regulator (NERC) has set in motion the process for partial activation of contracts in the sector, which was what necessitated the scheduled capacity test by NBET to various thermal plants around the country.

“Although, we were not able to record full participation of all GenCos, as some were either not able or showed willingness. With a better understanding of the intent, we expect full cooperation of GenCos in subsequent capacity tests of their plants. It is important to ascertain the actual capacity of our generation network to enable better planning and efficient dispatch of power within the grid network”.

Ighomrore added: “The situation in the Power Sector right now is not one for name calling or blame game, neither is it one for fictitious data reporting. As you are well aware, the Federal Government via NBET has continued to deploy innovative solutions aimed at sustaining sufficient cash flow within the Power Sector especially payments to the GenCos to ensure they meet their immediate obligations and continue to meet and ramp up generation to the National grid”.

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