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N143.82bn debt: GenCos, NBET on collision course

•Debts, major threat to power sector survival –GenCos

 

The Electricity Generation Companies (GenCos) in Nigeria are on a collision course with the Bulk Electricity Trading Plc (NBET) as the system debts to GenCos hit N143.82billion in three months.

 

Sunday Telegraph gathered exclusively at the weekend that the GenCos met in Jos on Monday, where they unanimously called on the Federal Government to intervene as the debts caused serious problem of liquidity in the entire power value chain.

 

The government-owned NBET buys electricity in bulk from generation companies through Power Purchase Agreements and sells to the Distribution Companies (DISCOs), which then supply to the consumers. Director, Egbin Power, one of the Gencos, Mr. Kola Adesina, confirmed the meeting of the GenCos to Sunday Telegraph at the facility.

He noted that the communiqué at the meeting has been sent to the appropriate quarters to intimate them of the implications of the debts to the entire value chain.

“We – all the power generation firms – met to, as one of the agenda, deliberate on the debts the NBET is owing us and implications of these to the sector.

 

“Egbin alone is being owned N388 billion since the start of privatisation and this figure varies from one Genco to another,” he said.

He said at the meeting of the Association of Power Generation Companies on Monday, members raised concerns about the debts owed to them. He added: “All the owners were there, and the concern that was expressed was that this money that is being owed, when are we going to get paid?

“The longer it takes us to be paid, the more detrimental to the health and wellbeing our machines and more importantly, to our staff.”

 

Adesina lamented that the country’s power generation had been hovering around 4,000MW in recent years. Checks by Sunday Telegraph showed that the debts hit N143.82 billion in the third quarter of 2020 alone.

 

Of the total invoice of N193.26 billion NBET received from GenCos in the three-month period, it only paid N49.44 billion, representing 25.58 per cent of the  invoice. The N193.26 billion invoice comprises a total invoice of N64.13 billion in July, N67.83 billion in August and N61.30 billion in September.

 

The N49.44 billion payment made to the GenCos by the bulk trader in July was N12.22 billion, representing 19.05 per cent; N13.49 billion in August, representing 19.90 per cent; and N23.73 billion in September, representing 38.72 per cent. Further checks indicated that remittances by electricity distribution companies (DisCos) partly contributed to NBET’s debt.

In this context, DisCos remitted only N50.68 billion to NBET in the third quarter of 2020, out of a total invoice of N189.05 billion received from NBET. The DisCos received a total invoice of N66.33 billion in July; N63.62 billion in August; and N59.10 billion in September.

 

But the DisCos only paid NBET N12.91 billion in July; N14.89 billion in August, and N22.88 billion in September. NBET partly relies on payments by DisCos to settle GenCos. Thus, all things being equal, NBET may continue to owe GenCos in the future, considering that Dis- Cos are not really efficient in collecting electricity tariffs due from customers.

 

Meanwhile, Adesina said that the total amount owed to Egbin by NBET included money for actual energy wheeled out, interest for late payments and available capacity payments.

Egbin, he said, has an installed capacity of 1,320MW consisting of six turbines of 220 megawatts each. The company said from 2020 till date, the plant had been unable to utilise 175MW of its available capacity due to challenges caused by the debts and gas and transmission constraints. A

desina said: “At the time when we took over this asset, we were generating averagely 400MW of electricity; today, we are averaging about 800MW. At a point in time, we went as high as 1,100MW. Invariably, this is an asset of strategic importance to Nigeria.

“The plant needs to be nurtured and maintained. If you don’t give this plant gas, there won’t be electricity. Gas is not within our control. “Our availability is limited to the regularity of gas that we receive. The more irregular the gas supply, the less likely there will be electricity.”

He noted that if the power generated at the station was not evacuated by the Transmission Company of Nigeria, it would be useless. Adesina said: “Unfortunately, as of today, technology has not allowed power of this size to be stored; so, we can’t keep it anywhere.

“So, invariably, we will have to switch off the plant, and when we switch off the plant, we have to pay our workers irrespective of whether there is gas or transmission. “Sadly, the plant is aging.

So, this plant requires more nurturing and maintenance for it to remain readily available for Nigerians.

“Now, where you have exchange rate move from N157/$1 during acquisition in 2013 to N502-N505/$1 in 2021, and the revenue profile is not in any way commensurate to that significant change. Then, we have a very serious problem.”

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