Mohammed Shosanya
Power Generation Companies in Nigeria,also known as “GenCos”,say unpaid N2trillion electricity debt Federal Government them is currently threatening the continued operation of their power generation plants.
They are currently owed over N2 trillion for power they generated, put unto the national grid, and consumed by end users, its Board Chairman, Col Sani Bello Rtd, the GenCos,said in a statement on Sunday.
He said this is in addition to the over 1.7trillion naira, funding gap created in the recent supplementary MYTO order 2024 without a designated fund to fill the gap.
Though the supplementary MYTO order leaves about 90% of GenCos monthly invoices unmet without a bankable securitisation, or financing plan, the power generated by GenCos have continued to be consumed in full without corresponding full payment,the statement said.
The GenCos implored the Federal Government and key stakeholders to urgently address the issue of inadequate payment for electricity generated by them and consumed on the national grid, insisting that the liquidity challenge threatening the continued operation.
The statement said:”GenCos are of the position that the liquidity challenge threatening the continued operation of their power generation plants must be addressed urgently, and sustainably too. Besides being owed huge debts, the GenCos also are operating
under very harsh monetary and fiscal conditions, occasioned by the economic realities that face the country today.
“The flow of money within the power industry is one of the fundamental problem preventing Nigerians from enjoying continued and sustainable improvement in electricity supply.
“Expeditiously solving these issues would enable GenCos meet their critical needs which would, in turn, ensure that they sustainably generate power, to enable Nigerians have better access to reliable electricity supply. GenCos will like to re-emphasise that this request requires urgent attention”.
“The power generated by GenCos have continued to be consumed in full without corresponding full payment, notwithstanding the commencement of the Partial Activation of Contracts in the NESI which took effect from July 1, 2022, the minimum remittance order, bilateral market declaration, waterfall arrangement, the risks of inflation, forex volatility with no dedicated window to cushion the effect of the forex impact, the supplementary MYTO order which leaves about 90% of GenCos monthly invoices unmet without a bankable securitisation, or financing plan. This situation has dire consequences for the GenCos and by extension the entire power value chain.
“GenCos are currently owed over two trillion Naira for power they generated, put unto the national grid, and consumed by end users.
“This is in addition to the over 1.7trillion naira, funding gap created in the recent supplementary MYTO order 2024 without a designated fund to fill the gap. This huge debt outlay is now greatly inhibiting GenCos ability to meet their obligations to lenders, O&M operations, necessary maintenance, spare parts procurements, and employee-related obligations etc”.
The statement quoted that the GenCos expectations of being settled through external support such as the
World Bank PSRO has also been dampened due to other market participants’ inability to meet their respective distribution linked indicators (DLIs), enshrined in the Power Sector Recovery Program (PSRP).
Access to forex is another problem given that major operation and maintenance needs in the generation subsector are dollarized,it said,adding that the importance of a specialised window or stable dollar allocation option for the GenCos cannot be overemphasised.
The GenCos advocated the need for a coordinated approach by all stakeholders in the NESI to address the liquidity issue realistically and sustainably in the power sector so that Nigerians can have access to reliable electricity supply.
The statement added:”In the light of the severity of the issues highlighted above, the GenCos are requesting that immediate and expedited action is taken to prevent national security challenges that may result from the failure of the GenCos to sustain steady generation of electricity of Nigerians.
“GenCos liquidity challenges is further worsened by the various policies introduced such as the payment waterfall in the NESI, which deprioritizes payment to GenCos”.
