FG Plans Forex For GenCos, To Offset Egbin Power Debt

The federal government has made commitment to give power generation companies(GenCos) access to foreign exchange as well as offset debt it owed Egbin Power.

Apart from gas constraints, GenCos are experiencing challenges maintaining their assets as spare parts are sourced abroad.

To this end, the minister of Power, Adebayo Adelabu, reaffirmed federal government’s commitment to gradually offset the debt owed Egbin Power, starting from April, while noting that, constraints of gas supply and foreign exchange are also being tackled.

This was made known during the Minister’s visit to the power Plant as part of his strategic measures to strengthen understanding among stakeholders with the overall aim of boosting power supply in Nigeria.

While affirming the commitment, the Minister said: “The Federal Government is prioritising paying down on the outstanding debt and I have assured the Board and Management of Egbin Power that, effective April we will start paying as a form of encouragement to continue to have them in operations.”

Regarding the constraints encountered by power generation companies in accessing Foreign Exchange, the minister explained that crucial steps are being taken to prioritise allocation of Forex to the power generation companies.

“Forex sourcing has been a major constraint to effective maintenance of the facility. I have seen what we have on ground here, and the critical need for spares and tools for continuous maintenance. We will liaise with the Central Bank of Nigeria (CBN) to prioritize Foreign Exchange allocation to the power sector.

“This will ensure the companies are able to ramp up capacity in terms of output. It is not just peculiar to Egbin Power Plant, it is across all the power generating Plants.

They need Forex for them to be able to maintain the turbines, replace tools and spares.

“This has been a major issue. I am going to takes steps to ensure I liaise with the CBN to see how they can prioritize Forex allocation to the power generating companies,” the minister said.

While speaking on challenges of gas supply, he explained that , engagements were held with the ministry of Petroleum Resources and gas suppliers as part of measures to guarantee payment of debts and resolution of the gas constraints.

“Gas shortage has been an impediment to almost all our gas power plants. And we already had conversation with the Honourable Minister of Petroleum Resources.

We are also meeting with the gas suppliers to plead with them and have an understanding that the FG is prepared to start paying down on the debt that we owe the gas supply companies.

“We need to make some cash injection in terms of payments, we want to give them some guaranteed debt instruments in terms of promissory note. And we are looking at allowing them access to Nigerian gas wells. So that this will be used to defray the outstanding debt of the gas suppliers over time,” he explained.

The minister commended the board and management team of Egbin Power for its robust investment to improve, sustain and maintain the Plant’s infrastructure and facility, while contributing largely to the sector despite the challenges.

While stressing on the impact of the debt and gas constraints on the Plant, the chief executive officer (CEO). Egbin Power, Mokhtar Bounour said: “One of the major challenges we are facing is gas constraint, which is not allowing us to run the full capacity of the Plant. It requires a lot of investment efforts to keep the units running and safe.

“The other issue is the accumulated debt which the Minister discussed with us. On our part we are adequately ensuring the maintenance, availability of the Plant and its efficiency. We are investing a lot to get these units to run optimally. This requires millions of dollars in investment,” Bounour explained.

He commended the minister for his commitment to address the challenges. “We highlighted the challenges we are facing, and the Federal Government, through the Minister of Power, has promised to start solving them gradually so we can start seeing improvements in the near future. We hope that the liquidity challenge will be solved soon as the Minister has promised,” Bounour added