N1tn Debt Will Lead To Plants Shutdown – Gencos

Electricity generation companies have said they have no plans to disrupt power supply in the country but their refusal to remit payment for gas due to the non-payment of the debt owed them will lead to the shutdown of power plants. The Minister of Power, Works and Housing, Mr. Babatunde Fashola, last week claimed that…”
Tolani Faranpojo
March 20, 2018 11:44 am

Electricity generation companies have said they have no plans to disrupt power supply in the country but their refusal to remit payment for gas due to the non-payment of the debt owed them will lead to the shutdown of power plants.

The Minister of Power, Works and Housing, Mr. Babatunde Fashola, last week claimed that the Gencos were planning to disrupt the supply of electricity in the country.

“Let me say very clearly to all operators that I get reports of many of the clandestine meetings that some of them (Gencos) are holding with a view to disrupting the supply for political capital,” he said at the 25th Monthly Power Sector Meeting in Uyo.

The Executive Secretary, Association of Power Generation Companies, Dr. Joy Ogaji, told our correspondent in a telephone interview on Monday, “We are in the business of power generation. So, don’t you think we cannot disrupt our business? We have not issued any such threat that we are going to shut down power.

“But it is natural that when we are not being paid, we don’t have money to buy gas to generate power and we cannot pay salaries. So, automatically, the power plants will shut down even without us wanting to shut them down. We have not issued any notice that we are shutting down, but the natural occurrence will happen.”

Asked when the “natural occurrence” could happen, she said, “It is completely out of our control.

“The Nigeria Gas Processing and Transportation Company Limited, which supplies gas to some power plants, has given ultimatum to all the generation companies that use gas, that if they don’t make their contracts effective by paying 100 per cent, they will stop giving us gas. So, if you ask me how soon, it is as soon as the NGPTC is ready to shut off gas to us.”

About 80 per cent of the electricity generated in the country is from gas-fired power plants, with hydro plants contributing the rest.

“We are owed about N1tn by the (electricity) market. About half of it is owed to gas companies, because it is as we are paid that we pay them (gas suppliers). And in some cases, we even took loans to pay some of them because if you don’t pay, you don’t get gas,” Ogaji added.

The government-owned Nigerian Bulk Electricity Trading Plc buys electricity in bulk from the Gencos and sell to the distribution companies, which then supply it to the consumers.

According to Ogaji, the NBET was established with the mandate that it would pay the Gencos 100 per cent.

She said, “But it has not paid the Gencos 100 per cent. What the NBET has kept telling us is that Discos are not paying, and Discos say that consumers are not paying.

“From the beginning in 2013 till now, Gencos have not pushed the government like this; we have been enduring, taking loans. But now, even the banks are not giving us loans to buy gas and generate. So, we are in a conundrum.”

She added that the association had already, through several letters, informed all the leaders of the sector, including the minister and the Nigerian Electricity Regulatory Commission, about the challenges facing the Gencos.

The PUNCH had two weeks ago reported that some Gencos had dragged the government before the Federal High Court in Abuja over what they termed discriminatory practices against their interests and those of gas suppliers.

The firms also accused the Federal Government of conferring preferential treatment on Azura Power West Africa Limited and Accugas Limited at their own expense.

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