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Tag: GENCOs

  • TCN assures GenCos of 6,000Mw

    TCN assures GenCos of 6,000Mw

    Following the permission for eligible customers to purchase electricity directly from the electricity generation companies (GenCos), the Transmission Company of Nigeria (TCN) has assured power producers of its capacity to transmit 6,000megawatts ((Mw) of electricity.

    The Executive Secretary, Association of Power Generation Companies (APGC), Barr Joy Ogaji, told reporters in Abuja yesterday that the TCN has always recorded stranded 2,000Mw that is readily available for customers.

    She explained that power for eligible customers will not in anyway affect residential customers that are willing to pay for power since the sector will simply resort to sending out the stranded 2,000Mw.

    Ogaji said by this week, the Nigerian Electricity Regulatory Commission (NERC) will come up with a framework on the provision of electricity for eligible customers.

    She said GenCos are owed nearly N600billion, while they are in turn owing gas producers N200billion. This, she said, has degenerated to a situation of cash and carry gas that has further led to the shutdown of some power plants.

    Commending the Federal Government on the permission for eligible customers to get power directly from GenCos, she recalled that “over three years after privatisation, the 11 distribution companies have enjoyed the monopoly of bulk power purchase and are still unable to distribute and account properly for power purchased and distributed, while we have GenCos stakeholders, who are potentially competitive entities, waiting desperately to sell more power as well as end users willing to buy more power for residential, commercial and industrial use.”

    She said the declaration does not in any way spell doom stressing that GenCos can now sell power to suppressed load centres thereby making up for dwindling revenue and pay their gas suppliers.

    Customers, according to her, now have the permission to cooperate amongst themselves providing the enabling environment and infrastructure to be classified as “eligible customers.”.

    She said that the idea means investing in the right infrastructure such as meters, power lines transformers and electrical switch gears.

    Ogaji submits that the declaration “portends several benefits for the sector as it will also address some of the liquidity and revenue shortfall in the sector as guaranteed cash flow will definitely boost the morale for potential investors in the area of gas field development, power generation capacity and also in the manufacturing industry with assurance of constant power supply to meet production demand.”

  • How over N400b debts by Discos crippled GenCos

    How over N400b debts by Discos crippled GenCos

    There are fresh insights as to why the operations of the different power generation companies (GenCos) across the country have been rendered prostrate.

    The Nation can authoritatively report that the over N400billion debts incurred by the various electricity distribution companies (DisCos) has almost crippled the activities of the GenCos.

    In a recent interview with The Nation, Dr Joy Ogaji, the pioneer Executive Secretary, Association of Power Generation Companies (APGC) had disclosed that GenCos are being owed over N400billion in accumulated debt for power generated and supplied from 1st November 2013 till date, thus reducing their ability to pay for gas and maintain their plants amongst other obligations.

    On plans by the GenCos to bypass the Discos and supply power directly to certain class of customers due to the huge indebtedness by the Discos, Dr. Ogaji, who spoke through her media aide, Ogechi Okorondu said it was an option being considered.

    “Following the high liquidity in the market, the GenCos are seriously considering alternative ways to sell power to Eligible Customers. The Nigeria Electricity Act 2005 makes provision for GenCos to generate and sell electricity directly to Eligible Customers. This action is in sync with the President’s directive that Nigerians think outside the box, GenCos are thinking.”

    While reacting to an evaluation/assessment report carried out by the Nigeria Electricity Regulatory Commission which scored the various GenCos and Discos below 30 per cent, the APGC boss said the NERC should take into consideration the daunting challenges confronting the GenCos since privatisation before doing such assessment.

    “When generation companies were invited to buy these assets, the government promised that the bulk trader set up to take the power said the GenCos should not worry about payment, but now the bulk traders have failed. Despite the over N400billion debt owed the GenCos they have continued to generate power.”

    She was however quick to add that the NERC has justification to fine if Discos or GenCos failed to observe their contractual agreement terms for privatisation. “NERC said it had imposed some fines, totalling $4.2 million on eight Discos for breaching some regulation guidelines in 2016 alone. There were reports that some Discos were turning down their electricity load allocations thereby leading to low supply to consumers.”

    On claims that both government agencies and departments are not supporting the Discos and GenCos to perform optimally, she said: “There is need to strengthen the regulatory frameworks to avoid inconsistencies. About 60% of the sector issues are caused by the regulator.”

    The way forward out of this precarious situation, she said is for the government to prevail on DisCos to meter their customers and be active in revenue collection. “There are many people who are not captured by the DisCos and, as a result, get estimated bills, thereby making the DisCos to lose money. The government should also ensure to pay off all monies accruable to the GenCos from International Customers. In addition, we implore the Minister of Power to Declare Eligible Customers.”

  • You are not sincere, GenCos tell DisCos

    • Fed Govt’s debts to GenCos hit N500b

    The crisis in the Nigerian Electricity Supply Industry (NESI) got messier yesterday as the electricity generation companies (GenCos) accused the electricity distribution companies (DisCos) of being insincere with their account records..

    Whereas the DisCos had condemned the request from the  Nigeria Electricity Regulatory Commission (NERC) to open up their books, the GenCos under the auspices of Association of Power Generation Companies (APGC), described it “as not just a welcomed development, but also a wake-up call to all participants in the electricity market.”

    The APGC Executive Secretary, Dr. Joy Ogaji, who addressed reporters in Abuja yesterday, recalled that a fortnight ago the Association of Nigerian Electricity Distributors (ANED) likened the move to centralize their revenue accounts to nationalisation of the Discos.

    Ogaji expressed surprise that DisCos are churning out stories and “crying wolf” to gain consumers’ sympathy whereas the NERC enacted the tariff with their consent.

    She added that “there is something that Discos are not telling the people. What government is calling for is not just escrowing but visibility.”

    She however explained that the electricity sector is a value -chain that needs to be remunerated as  applicable covering the cost of generation, transmission and distribution .

    The GenCos, according to her, are entitled to “60 per cent of markets remittance as they not just generate power but also pay for gas supply and gas transportation. Transmission charge cost 11 per cent, distribution gets 25 per cent while the remaining four per cent is meant for regulatory charges and NBET.

    “The revenue referred to by the distribution companies are not their personal revenue but market funds to which they were made trustees to collect and remit.”

  • ‘How GenCos battle liquidity problems’

    The power generation companies (GenCos) are finding it difficult to get loans from banks for their operations, the Association of Power Generation Companies (APGC) Executive Secretary, Dr Joy Ogaji, has said.

    She said banks are not ready to provide loans to the firms because, they would not pay back.

    She said the development made  the firms to seek payment  for electricity generated and supplied to the power distribution companies(DisCos).

    In a chat with  The Nation, Ogaji said the controversy among the operators in the industry, had complicated the problem of the GenCos.

    Ogaji said: ‘’The Nigerian Bulk Electricity Trader (NBET) is accusing  the DisCos of not paying for the electricity it is supplying to them, while the DisCos are also blaming consumers – residential, commercial, and industrial concern, including  ministries,departments and agencies (MDAs) for owing them. This has compunded the woes of GenCos in the country.”

    On the other hand, Ogaji explained that the GenCos are not ready to produce more electricity, because they know it would not be paid for. “How do you expect GenCos to pay back the loans they collected from banks and workers’ salaries in this kind of situation?” she asked. She said GenCos, also incur losses they are not ready for in the course of generating electricity.

    She said losses are incurred in areas such as transportation of gas from the marketers to the thermal plants, storage of electricity, among others.

    According to her, the development is sending a signal that the country would be in darkness, if urgent measures are not taken to avert it.

    She said gas marketing firms  are shutting down supplies,because  generation companies cannot neither pay for product, nor pay salaries of their workers.

    She said owing to liquidity squeeze in the sector, most of the generation companies to maintain their machinery,  owe salaries and are laying off their staff.

    She urged the Federal Government to hold the DisCos accountable to  the agreement, they signed with  the Federal Government during the period of privatisation of the sector in 2013.

    She said, by so doing, the DisCos  would fulfil  their own part of obligations, among performing other roles that would help in moving the sector forward.

    He said wheh this happens, the  DisCos would would be able to meet their financial obligations to the GenCos among others in the value chain.

    She noted that when the generation companies were invited to buy the assets of Power Holding Company of Nigeria(PHCN), by   the Federal Government, the firms were assured that they would not have any problems.

    Ogaji said, few years after the privitisation, the GenCos are having problems meeting their obligations.

    This, she said, is having a spiral effects on the industry, noting that  operators have been affected by the development.

    She advised  the Federal Government to provide a holistic method of solving the problems in the sector, stressing that solving one part of the problem and leaving the other unsolved would not augur well for the sector, which is struggling to survive.

  • GenCos warn of imminent blackout over N601b debt

    GenCos warn of imminent blackout over N601b debt

    Investors in the generation companies (GenCos) have warned of an imminent blackout nationwide if the N601 billion debts owed them by consumers through the off-taker, the Nigerian Bulk Electricity Trading Plc (NBET) – a Federal Government’s owned public liability company.

    The investors spoke yesterday at the Nigeria Power Summit, part of the ongoing Nigeria Oil and Gas Conference (NOG) holding in Abuja.

    The Managing Director and Chief Executive Officer of Mainstream Energy Solutions Limited, Mr. LamuAudu, stated that only 20 percent of the cost of power produced across the supply value chain is being paid for.He noted that foreign exchange (forex) challenge also remains a major bottleneck for power investors as a result fluctuating exchange rates, which was less than N200 to a dollar when the power assets were bought, and currently above N350.

    He said: “Virtually all the spare parts used in the power sector are imported and we need foreign exchange to procure them. But, unfortunately, the fluctuating exchange rate has made planning difficult for investors.”

    Another worrisome trend in the sector, according to Audu, is the issue of ageing transmission infrastructure, which most time leads to rejection of generated power by the Transmission Company of Nigeria (TCN). “This is a major loss on the part of power generation companies. When the generated power is rejected, who bears the loss? I think government should be in a position to pay for this. And going forward, I think TCN should be privatised,” he advised.

    Also the Managing Director of Sahara Power, Mr. Kola Adesina, lamented about the paucity of funds for power investors. H e noted that lack of fund remains a stumbling block to the growth of the sector, adding that power sector being a cycle feeds from four sources; gas, generation, transmission and distribution. He said when one leg of the cycle is stifled of fund, all other segments are affected from functioning at optimal level.

    According to him, the inability of consumers to pay for power consumed ultimately affects payment to gas producers,  GenCos  and the transmission company. He also noted that lack of adequate gas supply to the generating companies is also a major issue hindering the smooth operation of the sector, adding that constant attacks on gas infrastructure by agitators remains an issue that government must address for the sector to move forward.

  • Fed Govt underpays GenCos by over N30b monthly

    Fed Govt underpays GenCos by over N30b monthly

    • Gas accounts for 40% of electricity tariff

    The Federal Government underpays power generation companies (GenCos) by over 70 per cent (about N30billion) for their services, thereby compounding their financial woes, The Nation has learnt.

    The Executive  Secretary, Association of Power Generation Companies (APGC),  Dr. Joy Ogaji, told The Nation that the best and urgent step the government should take to make the power sector efficient, is to substantially improve liquidity in the sector by paying the debts owed the sector, especially GenCos by government’s ministries, departments and agencies (MDAs).

    She said the government should ensure that debts were paid, stressing that future payments should be  made promptly to enable the power sector improve services substantially.

    “The government should ensure that there is payment guarantee, no more shortfalls in payment. It is imperative to state here that the investment on generation is at the instance of the off-taker (Nigerian Bulk Electricity Trading Plc, NBET) a  Federal Government’s owned public liability company.

    “Due to high market liquidity squeeze, GenCos including the thermal and hydro plants lack the necessary funding for their operations, acquiring spare parts and equipment and meeting other obligations for the power generation stations.

    “Market payment statistics shows that on a monthly basis, generation companies’ invoices amount to about N35 billion to N40billion, out of which only about N7billion is paid. The implication is that the debt profile of the GenCos is about N30billion per month with no plans in place to clear these and put a sustainable solution for the sector.

    “We have been given unfulfilled promises of ‘government is working out a solution’ without a timeline and fulfillment. We are all on life support and could be dead any moment from now, she said.”

    For her, what the GenCos are asking for are needed for transparency in market funds and remittance, and declaration of eligible customers to enable them have some form of relief, she said, saying government should give a special concession to the GenCos in sourcing for foreign exchange.

    “There  is need for full payment of CBN-Nigeria Electricity Market Stabilisation Facility (NEMSF), NBET, Market Operator (MO) and all owing market participants to pay immediately all money owed the GenCos,” adding that a forex stabilisation fund be created to avoid tariff hikes.

    “Electricity market should be run as a contract based market with penalties fully enforced,” she said,  adding that the cost of gas constitutes about 40 per cent of wholesale electricity tariffs in Nigeria.

    The Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED),   Sunday Oduntan, said the illiquidity in the power sector rose from N1 trillion last November to N1.1trillion by this January.

  • N120b debts worsen GenCos’ operation challenges

    N120b debts worsen GenCos’ operation challenges

    The inability of the Federal    Government to pay over N120 billion owed power generation companies (GenCos) has hampered their ability to operate efficiently.

    Former Executive Director, National Integrated Power Project (NIPP), Dr Albert Okorogu, said power generation companies, including the NIPP plants, were in a precarious situation because of their inability to raise enough money for production.

    He said the firms’ hope of reviving their financial position was dashed by what he described as “tactical silence” of the government on the payment of debts owed them. He said the debts were long overdue, noting that they were marred during the  President Goodluck Jonathan administration.

    Okorogu said: “As at the last time I checked the operation of the plants, the NIPP plants were not doing well because the operators were being owed huge amount of money by the government. The debts were incurred during the regime of former President Jonathan and transferred to the current administration of President Muhammad Buhari.

    “Due to the government’s failure to pay the debts, the GenCos are in financial mess. The firms can neither produce well nor offset the debts they owe gas suppliers. The issue is having undesirable effects on their operation and the sector at large.”

    Okorogu told The Nation in Lagos that power generation companies unbundled from the defunct Power Holding Company of Nigeria (PHCN) and NIPPs were owed by the government, adding that the Central Bank of Nigeria (CBN) has approved payment for the debts before President Jonathan left office.

    Okorogu, who was the former Special Assistant on Renewable Energy, to the former Minister of Power, Prof Chinedu Nebo, also said apart from gas, liquidity wa s another problem facing the sector. He said operation of the sector was interdependent, noting that problems in one segment of the value chain spills over to another segment.

    He said liquidity problem in the sector was making it difficult for the firms to maintain their turbines, sell them and get the necessary market value, adding that firms that bided for the NIPP plants were unable to buy them because they do not have gas to operate them.

    NDPHC’s spokesman, Mr Yakubu Lawal, said Federal Government was indebted to the power generation firms. He said many GenCos are being owed by the government, adding that   some firms were owed between N20billion to N30billion, while others were owed N50billion.

    Yakubu said: “To treat the debt owed the power plants under NIPP in isolation is not good enough. Virtually all the power generation companies are being owed by the Federal Government.  The debts owed NIPPs is huge because seven of its plants are on the national grid. I’m sure the companies would be happy to get their money back.

  • GENCOs, DISCOs at war over mounting debts

    GENCOs, DISCOs at war over mounting debts

    The power generation companies (GENCOs) may have drawn the battle line with the electricity distribution companies (DISCOs) over the growing indebtedness estimated at over N400billion, a development experts believe may have adverse effect on the already deplorable power situation across the country, reports Ibrahim Apekhade Yusuf

    Time was when the power generation companies (GENCOs) and the distribution companies (DISCOs) were best of allies ever but all that has become a thing of the past now as both of them no longer see eye-to-eye in a manner of speaking.

    The reason for this is not far to seek: the once cordial relationship enjoyed by the GENCOs and DISCOs has turned sour because of the growing debts owed by the latter.

    Investigation by The Nation revealed that the DISCOs owe the GENCOs a very humongous sum, accumulated in the last couple of years.

    Crux of the matter                                                                                                                                                                                                                                                                    

    At issue is that DISCOs receive bulk power through the Nigerian Bulk Electricity Trading Plc (NBET) supplied by GENCOs.

    The inability of the DISCOs to meet their payment obligations to NBET for power supplied by the GENCOs, has also made it impossible for the GENCOs to pay the gas suppliers.

    Expectedly, the DISCOs have blamed their inability to meet their financial obligations in the electricity value chain on non-reflective tariffs, vandalism, low power generation, inability to access credit facilities from the banks and non-payment of bills by customers.

    The DISCOs also claimed that they are being owed a debt of N100 billion by ministries, agencies and departments (MDAs), a debt, which the Minister of Power, Works and Housing, Mr. Babatunde Fashola, said was subject to verification.

    However, while a majority of the DISCOs have demonstrated increasing capacity to access funds for network development, others have blamed their excuses on the non-reflective tariffs and the N3 trillion exposure of the financial sector to the banks for their failure to discharge their obligations.

    Peeved by the apparent non-performance of some of the DISCOs, Fashola had advised that “those DISCOs who cannot run the business must be honest with themselves and begin to look for options either to raise capitals, to get more strategic partners in or to do whatever they consider appropriate within the framework of their contract in order to get on with this job.”

    The Nation gathered that the power companies are battling with a debt overhang of over N400billion.

    While GENCOs’ debt is put at over N300bn, DISCOs have complained of being owed over N100bn by customers.

    At the twilight of last year, the Executive Secretary, Association of Power Generation Companies, Dr. Joy Ogaji, had revealed that: “The debt is over N300bn that GENCOs are being owed. If the situation is not checked, there will be blackout. It is so imminent that I don’t know if most of the generation we are having now can go beyond Christmas if the payment problem is not solved. We can’t pay contractors; most of the machines are packing up.”

    Ogaji, however, said the Nigerian Bulk Electricity Trading Company Plc should be blamed for the problem, saying, “As GENCOs, we don’t really have any direct relationship with DISCOs at the moment; GENCOs are meant to generate power and government brought NBET as a wholesaler, which takes all the power being generated by GENCOs and sells to the DISCOs. So the onus lies on NBET to collect the money from the DISCOs. “The claim on whether DISCOs are remitting money or not should not be the problem of the GENCOs, but that of NBET. Government told us that NBET is properly capitalised and has enough money to meet all of the GENCOs’ payments. But unfortunately, NBET has not been able to do that.”

    In a chat with The Nation, one of the GENCOs confided in our correspondent at the weekend that through their umbrella association, they have resolved to approach the Nigerian Electricity Regulation Commission (NERC) for approval to supply power directly to certain categories of customers and also collect the bills directly.

    Thus, the power generators are making subtle moves to bypass the DISCOs and supply power directly to certain class of customers.

    “The DISCOs owe the GENCOs a lot of money and that is why there is crisis in the sector. Some of the Discos actually do not have what it takes to run the sector and some of them will soon go under. The GENCOs are not talking like the Discos because they also owe gas suppliers. They have also formed their own association and plan to meet NERC for approval to supply power directly to certain class of customers and also collect the bills directly. That is the only out to ensure that the GENCOs do not collapse,” one of the operators who asked not to be named explained to our correspondent.

    In a recent advertisement by the Association of Nigerian Electricity Distributors, the umbrella body for the DISCOs stated that its members were being owed N100bn by consumers, including military and government Ministries, Departments and Agencies as their biggest debtors.

    However, different operators in the sector blamed the DISCOs for the drastic illiquidity in the power market, as they argued that the DISCOs were not doing enough with respect to revenue collection from electricity consumers.

    Aside the NBET, the Niger Delta Power Holding Company recently urged the DISCOs to ensure adequate remittance to the bulk trader in order to enhance smooth operations of the power business.

    The Managing Director/Chief Executive Officer, NDPHC, Mr. Chiedu Ugbo, stated that the indebtedness to his company by the power market as of August 2016 was over N105bn.

    “The total energy invoiced by the eight operational NDPHC plants since they started functioning amount to about N235bn. But out of this amount and as of August 2016, we were being owed about N105bn,” Ugbo told newsmen in Abuja.

    Echoing similar sentiments, President, Nigerian Gas Association and Managing Director, Frontier Oil Limited, Mr. Dada Thomas, in a media interview recently blamed the DISCOs for the parlous state of the sector.

    But the DISCOs had argued that aside the fact that the current Multi Year Tariff Order put together by the Nigerian Electricity Regulatory Commission was not cost reflective enough, the refusal of ministries, departments and agencies of government to settle their electricity bills was also hampering their ability in making the required remittances.

    The Chief Executive Officer, ANED, Mr. Azu Obiaya, recently told our correspondent that to avert an increase of over 200 per cent in electricity tariff payable by residential consumers in the near future, the federal government had to intervene in the sector.

    He explained that the government’s intervention was vital in order to address the N809bn revenue shortfall in the industry.

    Obiaya insisted that the intervention could come in form of subsidy to consumers, access to foreign exchange by the companies, as well as commercial reasonable financing for the DISCOs.

    He explained that DISCOs were not willing and could not impose any increase in tariff on consumers, but maintained that to avoid a situation where the consumers would have to pay as high as N70 to N105 per kilowatt-hour as energy charge, the federal government must do something.

    Currently, the average rate being paid as energy charge by residential consumers across the country is N22.8/KWH, but this may increase if nothing is done to address the N809bn revenue shortfall in the power sector, according to the DISCOs.

    The blame game

    The blame game in the power sector has come to the fore again as Transmission Company of Nigeria (TCN) claimed that DISCOs 30 percent remittances on monthly invoices is responsible for the current poor state of the country’s electricity services.

    Nigeria’s economic growth has been slowed by lack of steady power supply, despite claims by government of embarking on privatisation of the sector, which has divided the former PHCN into different components: GENCOs, DISCOs and TCN with the promise to double power generation from its present 4.5 mega watts.

    According to the General Manager in charge of Transmission at TCN, Bede Opara, DISCOs have not been able to pay their debts due to energy theft and other issues. “The low revenue collection affects transmissions as well as gas plants. All these are parts of the issues affecting the sector at one point or the other.”

    Power drop in months

    It is however instructive to note that the Nigeria Electricity System Operator, NESO, a section of TCN responsible for operating the transmission system, has indicated that due to these shortfalls there is constant collapse of the system.

    According to their report in May 2016, the national grid collapsed five times. In June, it collapsed four times. July, September and October, each witnessed one collapse, while November and December witnessed three collapses each. The transmission network was said to have recorded over 26 system collapses in 2016. These were largely blamed on weak transmission network, regarded as the weakest link in the electricity value chain.

    Before now generation and distribution companies have asked for more time and patience from Nigerians to improve electricity supply. Their plea came as they identified weak transmission network as a major hindrance in the attainment of the 10,000 megawatts target set by President Muhammadu Buhari to be achieved in 2019.

    Data obtained, showed that Kaduna, Eko, Jos, Yola, Port Harcourt, Abuja, Ibadan and Benin DISCOs rejected the 1,336.75MWH of power from TCN in the third quarter of this year, despite instability in the supply of electricity across the country.

    Specifically, in the month of July, a total of 318.83MWH, which was three per cent of the total energy delivered to the DISCOs, was rejected by four of the firms. In July, the Kaduna DISCO’s rejection of 132.99MWH made it the highest in the month. The Eko DISCO rejected 67.46MWH; Jos, 63.05MWH; while the Yola DISCO rejected 55.33MWH.

    In the same month, the Port Harcourt DISCO took in the highest quantum of power at 441.43MWH; Kano accepted 397MWH; while the Enugu DISCO collected 302.49MWH.

    In August, there was an increase in load rejection by the distribution companies to the tune of 541.56MWH, which was four per cent of the total energy delivered to them as against the 318.83MWH delivered in the previous month.

    The Port Harcourt DISCO rejected the most quantum of power with a total of 239.88MWH, followed by the Eko DISCO with 134.8MWH. In the month under review, five DISCOs took excess load beyond their Multi-Year Tariff Order allocation to the tune of 187.21MWH.

    The Abuja DISCO took the most, with 132.81MWH; followed by the Kaduna Disco, with 23.21MWH; Ibadan, 16.24MWH; and Enugu, 12.42MWH. Further analysis showed that September saw the rejection of 476.36MW, representing 12 per cent of the total energy delivered to the Discos. It was, therefore, the highest load rejection in the quarter.

    The Abuja DISCO rejected 94.72MWH, followed closely by Port Harcourt, with 92.35MWH; Ibadan was next with 67.14MWH; and the Benin DISCO turned down 46.40MWH. Among all the DISCOs, only Kaduna accepted power beyond its MYTO allocation, taking in 65.96MWH in excess of its MYTO allocation.

     

  • Fed Govt is owing GenCos over N400b

    Fed Govt is owing GenCos over N400b

    •Firms may pack up soon, says group

    The Federal Government is owing power generation companies (GenCos) over N400 billion, Association of Power Generation Companies (APGC) Executive Secretary Mrs. Joy Ogaji has said.

    She said the debts were from November 2013 to last month.

    Mrs. Ogaji, in an interview with The Nation, said Egbin Power PLC was owed N93 billion and Niger Delta Power Holding Company (NDPHC), N105 billion.

    Others are Ughelli Power Company ( N50 billion ), Geregu Power Plant( N80billion), Kainji, Jebba and Shiroro Hydro power plant (N30billion).

    The amount excludes debts owed Olorunsogo and Omotosho power plants, she added.

    Mrs. Ogaji said the debts were hampering the firms’ performance, urging the government to pay up to enable them buy gas.

    She said: “The generation companies can no longer pay salaries; they can’t even pay for gas and the gas companies are no longer selling the product to them, as a result of the debts. Banks are not ready to advance credit to the GenCos again. This means that the power firms cannot get money to buy gas. Also, banks are not sure of getting their money back from the GenCos, even when they offer them facility.”

    The GenCos, she said, did not have money to maintain their equipment, and pay contractors.

    According to her, four of the contractors have stopped working because they are being owed.

    Mrs. Ogaji said the generating plants may pack up soon, since they were not being maintained promptly.

    She urged the government to hold the DisCos accountable to the terms of their agreement and make them to pay, adding that the GenCos should not get involved.

    Mrs Ogaji said: “When generation companies were invited to buy these assets, the government promised that the bulk trader set up to take the power said the GenCos should not worry about payment, but now the bulk trader is not paying up these debts,’’ adding that the GenCos didn’t have any contract with the DisCos.

    She said the association was engaging the government at various levels and working out lasting solutions to the sector’s problems.

    Mrs. Ogaji regretted that the solutions were coming rather too slowly. She said: “All we have been hearing is that the government is working out plan; the generation companies are not part of that plan, the government should involve the generation companies in their plan,”expressing the opinion if you are finding a solution for the gencos let them be part of that solution to know if the solution is viable and sustainable’’.

    NDPHC General Manager, Corporate Communication, Yakubu Lawal, confirmed that the company was being owed about N100 billion.

    To boost their revenue base, he  urged the government to prevail on DisCos to meter their customers and be active in revenue collection, adding that there were many people not captured by the DisCos and, as a result, get estimated bills, thereby making the DisCos to lose money.

    Lawal maintained that there was the need for DisCos to meter their customers, adding that it would help to increase their revenue.

    He urged the government to raise some bonds for investors to access loans to continue their businesses.

     

  • Over N200b debt threatening our, say GenCos

    Over N200b debt threatening our, say GenCos

    •Operators seek lifeline from govt

    Power generation companies (GENCOs) have said the over N200 billion debt owed them by customers may affect their operations if the government does not intervene fast.

    Association of Power Generation Companies (APGC) Executive Secretary Dr. Joy Ogaji said the matter was getting to crisis point. She warned that cessation of operations was imminent as the bulk trader, the Nigerian Electricity Bulk Trader (NBET), is unable to commit to the terms of the power purchase agreements (PPAs) signed with them.

    She said despite the GenCos’ willingness to deliver power in line with the terms of their PPAs, they were unable to do so because of the huge debt.

    Dr. Ogaji said: “In the run-up to the Nigerian electricity sector privatisation, the government promised to set up NBET to shield GenCos from the vagaries of the market, and venturing to invest in the power generation assets was predicated on the promise by the bulk trader to shield the GenCos from these problems irrespective of what happens in the downstream sector of the industry.

    “The worsening market liquidity squeeze has culminated in a situation where the GenCos lack the necessary funding for their operations, acquiring spare parts and equipment for the power generation stations. Some GenCos have not been able to pay their workers for several months.

    “Most of the GenCos are frustrated by NBET’s poor settlement of their invoices (less than 20 per cent). The inability of NBET to handle payments to the GenCos in accordance with the PPAs they have with the agency is strangling their operations.”

    She said NBET that is supposed to help appears to be helpless, more in need of help than the GenCos.

    Dr Ogaji said NBET’s inability to help the GenCos resolve the chronic poor market liquidity challenge has affected  their  operations.

    “If the GenCos are to play their role in the power supply value chain, they must be saved the agony of the debt squeeze, which is threatening most of them to buckle under the weight,” she noted.

    The executive secretary assured that the GenCos were ready to explore all dispute resolution mechanisms including litigation, to test the PPA they signed with NBET.

    In the alternative, she said the association resolved that government should allow the GenCos to take advantage of the provisions of the EPSR Act 2005, which empowers eligible customers to bypass the wholesale electricity market and enter bilateral contracts with any willing eligible customer.

    Dr Ogaji said although the GenCos, at inception, were contractually obligated to ramp up electricity generation capacity by about 5,000 megawatts (Mw) over a five-year period, most of them have exceeded their targets. They were being faced with the issue of stranded capacity.

    For instance, she said Ughelli Transcorp, which had 160 Mw generation capacity at takeover, reached the 450 Mw capacity by September 2016, while Egbin at takeover in November 2013, had average 300 Mw generation due to the dismal state of its six units.

    Ogaji said Egbin plant has the capacity to generate an average of 1,100 Mw on availability of gas, saying when the overhaul of the remaining units is completed next year, the station would be operating at a minimum of 92 per cent of its capacity.

    She said when the overhaul of the remaining units is completed next year, the station would be operating at a minimum of 92 per cent of its capacity.