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Electricity generating companies warn Nigerians brace up for blackout should government fail to pay N601 billion debts owed to them

|  By Anayo Ezugwu  |  Mar 13, 2017 @ 01:00 GMT  |

NIGERIANS are likely to experience increased power outage any moment from now. This is because of consumers’ indebtedness to the electricity generating companies, GENCOs. The investors in the GENCOs warned that unless the N601 billion debts owed them by consumers through the off-taker, the Nigerian Bulk Electricity Trading Plc, NBET, are paid Nigerians should expect an imminent blackout nationwide.

At the two-day Nigeria Oil and Gas Conference, NOG, in Abuja, Lamu Audu, managing director, Mainstream Energy Solutions Limited, said only 20 percent of the cost of power produced across the supply value chain was paid for. He noted that foreign exchange challenge also remains a major bottleneck for power investors as a result fluctuating exchange rates, which was less than N200 to a dollar when the power assets were bought, and it is now above N400.

“Virtually all the spare parts used in the power sector are imported and we need foreign exchange to procure them. But, unfortunately, the fluctuating exchange rate has made planning difficult for investors.”

Another worrisome trend in the sector, according to Audu, is the issue of ageing transmission infrastructures, which most times leads to rejection of generated power by the Transmission Company of Nigeria, TCN. “This is a major loss on the part of power generation companies. When the generated power is rejected, who bears the loss? I think government should be in a position to pay for this. And going forward, I think TCN should be privatised,” he said.

Similarly, Kola Adesina, managing director, Sahara Power, lamented the paucity of funds for power investors. He noted that lack of fund remains a stumbling block to the growth of the sector, adding that power sector being a cycle feeds from four sources; gas, generation, transmission and distribution. He said when one leg of the cycle is stifled of fund, all other segments are affected from functioning at optimal level.

According to him, the inability of consumers to pay for power consumed ultimately affects payment to gas producers, GENCOs and the transmission company. He also noted that lack of adequate gas supply to the generating companies is also a major issue hindering the smooth operation of the sector, adding that constant attacks on gas infrastructure by agitators remains an issue that government must address for the sector to move forward.

The GENCOs had in 2016 said that its growing indebtedness may have adverse effect on the already deplorable power situation across the country. Joy Ogaji, executive secretary, Association of Power Generation Companies, had revealed that, “The debt is over N300 billion that GENCOs are being owed. If the situation is not checked, there will be blackout. It is so imminent that I don’t know if most of the generation we are having now can go beyond Christmas if the payment problem is not solved. We can’t pay contractors; most of the machines are packing up.”

Ogaji, however, said the Nigerian Bulk Electricity Trading Company Plc should be blamed for the problem. “As GENCOs, we don’t really have any direct relationship with DISCOs at the moment; GENCOs are meant to generate power and government brought NBET as a wholesaler, which takes all the power being generated by GENCOs and sells to the DISCOs. So the onus lies on NBET to collect the money from the DISCOs. The claim on whether DISCOs are remitting money or not should not be the problem of the GENCOs, but that of NBET; government told us that NBET is properly capitalised and has enough money to meet all of the GENCOs’ payments. But unfortunately, NBET has not been able to do that.”

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