GenCos Dismiss Strike Threat, Seek FG’s Intervention In Debt Servicing

Electricity Generation Companies, (GenCos) have called for the federal government’s intervention over unpaid power by Electricity Distribution Companies, DisCos.

Checks by LEADERSHIP Sunday confirmed that GenCos are currently owed about 90 per cent of their invoices for electricity delivered to the distribution companies

However, the GenCos said turning off their power plants would further compound their problems.

Inside sources in the Nigeria Bulk Electricity Trading Company, (NBET) confirmed to LEADERSHIP Sunday that though the debt is climbing, efforts are ongoing to resolve the issue.

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It was learnt that the federal government is about to release budgetary allocation for tariff shortfall soon.

Though, it was reported that the executive secretary of the Association of Power Generation Companies (GenCos), Dr. Joy Ogaji, warned of an impending strike action by the companies, because over 90 per cent of the invoices by the power companies had not been paid.

According to the report, the reduced payment was occasioned by delay in securing the budgetary top-up payment for tariff shortfall under the 2023 appropriation.

Ogaji said that plants were “shutting down because they are unable to meet their obligations and still keep their machines on the grid.” Yearly invoices by the GenCos hovered around N400 billion going by statistics from the Nigerian Bulk Electricity Trading Company (NBET). If the claims of the GenCos are anything to take serious, over N300 billion of electricity invoices in the country are not settled, the report said.

Ogaji said the foreign exchange crisis in the country and ramping down of power generating machines had downed some power plants and pushed maintenance cost of electricity GenCos to about $4.78 billion.

Nigeria’s exchange rate has risen by about 300 per cent from the rate in 2013 when the power sector was privatized. The GenCos noted that unless the companies have special windows to access foreign exchange at official price, yearly maintenance of equipment and other dollar denominated obligations may continue to threaten electricity supply in the country.

According to the report the 28 plants in the country would require $36 million for Hot Gas Path Inspection (HGPI) per plant, about $96 million would be needed for Major Inspection/Overhaul Quinquennial, $15 million is expected on General Spare Parts and Consumable, while Operations and Maintenance Fee would cost $24 million per plant

But one of the biggest thermal plants in Africa based in Lagos said generation plants are not just configured to be deliberately shut down because it is designed to run smoothly, it would be mechanically unjustifiable to shut down, however an appeal should be explored to recoup the debt.

“Our source in one of the GenCos said she is unaware of any plan to ask GenCos to shut down. Infact I am hearing it from you for the first time and I cannot ascertain the authenticity of your claim. May be you need to ask Mrs. Ogaji to name the GenCos she is referring to but I have no problem paying salaries or running my plant but certainly some money is out there yet unsettled, but we are not shutting down” the source told our Correspondent.

LEADERSHIP Sunday, however, authoritatively reports that generation companies are always paid on the due dates of their invoices.

Some portion of this payment goes towards direct payment for their gas supply and gas transportation to ensure they have adequate gas to sustain power generation (gas payment constitutes a significant portion of the invoice of some of the thermal generation companies).

Our source in NBET, confirms that regarding the balance due to GenCos after the gas payment has been backed out, there was a recent change in the budget administrative process for accessing the federal government tariff shortfall contribution to GenCos invoices, but this is being addressed. Our correspondent gathered that NBET has been assured that the money will be credited by next week.

Regarding the recently due invoices for February 2023 based on the market settlement calendar, the market payments have been approved and is being processed to them, which they will receive early next week after the holiday.