Power generation companies, GENCOs, have raised an alarm that the over N200 billion debt owed them by customers may affect their operations.
Association of Power Generation Companies, APGC, Executive Secretary Dr. Joy Ogaji said the matter was getting to crisis point. She warned that cessation of operations was imminent as the bulk trader, the Nigerian Electricity Bulk Trader (NBET), is unable to commit to the terms of the power purchase agreements (PPAs) signed with them.
Ogaji said despite the GenCos’ willingness to deliver power in line with the terms of their PPAs, they were unable to do so because of the huge debt.
“In the run-up to the Nigerian electricity sector privatisation, the government promised to set up NBET to shield GenCos from the vagaries of the market, and venturing to invest in the power generation assets was predicated on the promise by the bulk trader to shield the GenCos from these problems irrespective of what happens in the downstream sector of the industry,” she said.
“The worsening market liquidity squeeze has culminated in a situation where the GenCos lack the necessary funding for their operations, acquiring spare parts and equipment for the power generation stations. Some GenCos have not been able to pay their workers for several months.
“Most of the GenCos are frustrated by NBET’s poor settlement of their invoices (less than 20 per cent). The inability of NBET to handle payments to the GenCos in accordance with the PPAs they have with the agency is strangling their operations.”
She said NBET that is supposed to help appears to be helpless, more in need of help than the GenCos.