New Telegraph

N1.66trn debt may plunge Nigeria into darkness soon

Nigerians may witness total blackout soon as infrastructural facilities used in generating electricity continue to suffer neglect, New Telegraph has learnt.

 

This is due to the fact that installed and available electricity capacity is dropping by the day, especially with regard to generation. Coupled with this is the magawatts, which has, for years, been hovering between 3,000mw and 4,000 mw and at most 4,500mw.

 

The generation companies, it was gathered, are unable to provide electricity at optimum capacity due to obsolete equipment. Confirming the development, the Executive Secretary, Association of Power Generation Companies (APGC), Mrs Joy Ogaji, said the firms’ production was declining by the day, a development she attributed to lack of funding. APGC is the umbrella body of power generation companies such as Egbin Power Plant, Ughelli Power Plant among others, inherited from the defunct Power Holding Company of Nigeria (PHCN).

 

In an interview with New Telegraph, at the weekend, Ogaji said power generation firms were being owed N1.66trillion, adding that the issue was having grave consequences on their operation. She said the firms were being owed debts for seven years, adding that the debts had been accumulating since 2014.

 

The debts, she said, accumulated due to non-payment of redeem capacity by the Nigerian Bulk Electricity Trading Company (NBET) Limited. Redeem capacity is the capacity that should have been delivered, but not delivered, due to system operator’s instructions to a GenCo to reduce its capacity, in order to achieve grid balance and stability.

 

Ogaji stressed that the debts accumulate every month and, if left unsettled, would increase greatly by December this year. She said: “This aside includes debts owed the companies for the electricity generated and consumed by Nigerians without paying for it.

 

“Azura generates 450 megawatts of electricity. Yet the company pays the money, which is being charged in the sector.” According to Ogaji, available capacity is dropping due to obsolete equipment in the sector.

 

“The machines used for key activities in the course of accessing gas and above all generate electricity are crying for repairs, but there is no money on ground to fix them. All these things are responsible for the declining output in the sector. Honestly, the output is getting worse day by day,” she added.

 

She said that power generation companies were losing a lot for money, arguing that the loss is coming from debts owed the firms by various operators in the sector.

 

It would be recalled that the sector is still gasping for breath, despite the fact that it was privatised by the Federal Government in 2014. This happens as private investors, who bought the distribution and generation companies, are complaining of liquidity in the sector.

 

The poor power situation in the country, though experiencing some improvement in recent times, has been a source of concern to the citizens, investors and the government. The situation has remained disturbing that even the World Bank, early in the year, approved $500 million to support the government of Nigeria in improving its electricity distribution sector. The project will help boost electricity access by improving the performance of the Electricity Distribution Companies (DISCOs) through a large-scale metering program desired by Nigerians for a long time.

 

In addition, financial support would be provided to private distribution companies only on achievement of results in terms of access connections, improved financial management and network expansion. Records show that 85 million Nigerians don’t have access to grid electricity.

 

This represents 43 per cent of the country’s population and makes Nigeria the country with the largest energy access deficit in the world. The lack of reliable power is a significant constraint for citizens and businesses, resulting on annual economic losses estimated at $26.2 billion (₦10.1 trillion), which is equivalent to about two per cent of GDP.

 

According to the 2020 World Bank Doing Business report, Nigeria ranks 171 out of 190 countries in getting electricity and electricity access is seen as one of the major constraints for the private sector.

 

“Improving access and reliability of power is key to reduce poverty and unlocking economic growth in the aftermath of the global pandemic,” says Shubham Chaudhuri, World Bank Country Director.

 

“The operation will help improve the financial viability of the DISCOs and increase revenues for the whole Nigerian power sector, which is critical to save scarce fiscal resources and create jobs by increasing the productivity of private and public enterprises,” he added

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