New Telegraph

Concerns over FG’s N1.632trn indebtedness to GenCos heighten

Apathy and lack of due process have continued to trail the inability of Federal Government to pay N1.632.13 trillion debt owed power generation companies in the past seven years as operators accuse government of being insensitive to their plights. They said that the debt would not have accumulated had government or NBET been settling it.

In an interview with New Telegraph on the issue, the Executive Secretary, Association of Power Generation Companies (APGC), Dr Joy Ogaji, said that neither did government nor its agency, Nigerian Bulk Electricity Trading Company (NBET), deem it necessary to speak on the issue. AGPG is the umbrella body of electricity generating companies operating in Nigeria. She said: “No communication whatsoever on the debt owed the power firms. Neither did government nor NBET tell us (power firms) how and when it would offset the debts; even it is obvious that the firms are struggling to produce optimally due to their obsolete facilities and poor access to natural gas for production.”

Government owes the debts through the state-owned Nigerian Bulk Electricity Trading Company (NBET), which buys electricity in bulk from GenCos through Power Purchase Aggre-ment (PPA) and thereafter sell to power distribution companies for onward supply to consumers across the country. The debts were owned as a result of ‘Deemed Capacity’ used in electricity generation. Deemed Capacity is the capacity that should have been delivered, but for the system operator’s instructions to GenCos to derate or reduce its capacity to achieve grid balance and stability. According to her, the companies recorded capacity loss for seven years (2015 to 2021), adding that there is gross insensitivity in the ways and manners the issue of capacity loss accrued to the GenCos in the past few years is being handled.

The firms, Ogaji said, were accumulating debts daily, as they are unable to meet their obligations to their workers. She said that GenCos were facing two or more hurdles at the same time, stressing that they were battling to pay their workers, increase in the cost of debts owed them by NBET due to inflation, which is eating deep into the debts and occassional hitches encountered in the course of accessing gas for production.

The debts, she said, were increasing yearly, due to some factors in the country’s macro economic environments. One of the factors, she said, is inflationary rate, which is now double-digits, a development, which suggests that debts have increased sharply. In a paper sent by the body and made available to New Telegraph, the generation companies recorded a capacity loss of N214.93 million in 2015, N273.32 million in 2016, N236.46million in 2017, N264.08 million in 2018 and N256.97 million in 2019. Others are N266.10 million in 2020 and N120.25 million in 2021.

Recalled that the sector sometimes find it difficult to procure gas for production, a development, which is evident in fluctuations in the volume of electricity produced and supplied in Nigeria. Currently, the country’s electricity megawatts hovers between 3,800 and 4,000, a figure which is not enough to meet the needs of the country.

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