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Discos Huge Indebtedness Stifling GENCOs, APGC cries out

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Oge Obi

The Association of Power Generation Companies () has said that continuous failure in their monthly remittances to the NBET is badly hurting power generating companies ().

According the APGC, the Discos have continuously defaulted in their monthly remittances to the NBET.

The Executive Secretary of APGC, Dr. disclosed this on Wednesday in a response to questions emailed to her by a Correspondent with Punch Newspaper.

Citing reports from the NBET, the Executive Secretary stated that out of the N44.85bn invoice sent to the Discos in January, only N6.08bn was received from four firms, while seven others paid nothing.

She further disclosed that the Discos’ monthly revenue remittance as of Thursday was below 30 per cent.

“The Gencos have not been paid since June 2018. How then can the Gencos pay their gas suppliers? So, right now, we are being owed and our gas suppliers are also being owed over N1tn,” Ogaji said.

She stated that it was important for Federal Government to take cognisant of the impact of the non-payment of gas cost “even as thermal plants’ supply forms about 80 per cent of electricity in the sector.”

She further remarked that poor gas supply as a result of the non-payment of invoices would seriously affect power supply in the country.

According to the ES, the outstanding payments include the balance due to the Gencos under the Central Bank of Nigeria’s N213bn Electricity Market Stabilisation Facility; unpaid invoices from January 2015 to December 2016, with accrued interests; and interest payments due on the outstanding invoiced amounts.

“The terms of the Power Purchase Agreement between the Gencos and the NBET clearly provides for interest payment on invoices not paid within the period (45 days) stipulated by the PPA. “Furthermore, it is a commercial aberration for a party in a commercial transaction, who is owed and denied the benefit of its money, not to be entitled to interest payment.

“The Gencos’ PPA with the NBET also provides for capacity payment, which is not being made. Capacity payments are global norms in the electricity supply industry and play critical roles in enabling the Gencos to optimise their power generation capacities and making such capacities available when called upon. Beyond available capacity, the Gencos are also entitled to payment for deemed capacity.

“The result of the foregoing is that the Gencos have not been receiving full payment for the electricity supplied by them, while the gas suppliers have also not been receiving full payments for the gas supplied to the Gencos. This has accounted for the sub-optimal growth, inefficient operation and the current dire situation of the Gencos, which has huge negative impact on the entire power sector.”

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