GenCos Reiterate Outstanding Payments Exceed N6.2trn

Lucky Obukohwo, Reporting

NIGERIA, ABUJA – Electricity Generation Companies (GenCos) have reiterated that the outstanding amount, which exceeds N6.2 trillion, does not encompass all their contractual entitlements.

The Chief Executive Officer (CEO) of the Association of Power Generation Companies (APGC), Dr Joy Ogaji, in her statement, said that the debts continue to accumulate because GenCos are not fully paid for their output, despite incurring high costs for gas supply, plant maintenance, foreign exchange exposure, and financing obligations.

This persistent non-payment, she said, has rendered most GenCos technically insolvent and severely constrained their ability to invest in capacity maintenance and expansion.

According to the CEO, GenCos are not beneficiaries of the current subsidy regime but are, in fact, the biggest victims.

“GenCos are only requesting their receivables, which have accumulated over the years, as can be verified from the Multi-Year Tariff Order (MYTO) and Nigeria Bulk Electricity Trading (NBET) documents for power generated and consumed, but only 35 per cent is paid, leaving a huge contagion that is not cash-backed since 2015 to date,” she lamented.

Ogaji added that 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 gas supplied to the GenCos.

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This, she observed, has accounted for the sub-optimal growth, inefficient operation, and the current dire situation of the GenCos, which has a huge negative impact on the entire power sector.

“The current state of the market, where a generation company is short-changed for the benefit of other market participants, negates the tenets of MYTO, a tariff model for incentive-based regulation that seeks to reward performance above certain benchmarks, reduces technical and non-technical/commercial losses and leads to cost recovery and improved performance standards from all industry operators in the Nigerian Electricity Supply Industry (NESI).

“From the foregoing, the legacy GenCos and the Nigerian Independent Power Plants (NIPP) in the market have been operating without adequate sector risk protection, hence exposed to various operational and regulatory risks,” she said.

The CEO explained further that the obvious commercial justification is that GenCos have mobilised and paid for every input variable — fuel, labour and all other overhead costs needed to produce energy as declared — adding that all negotiated Power Purchase Agreements (PPAs) are approved by the Nigerian Electricity Regulatory Commission (NERC) after ensuring that such costs are prudently incurred before they are sent to NBET to make payments.

“The presiding contracts and rules determine the basis of relationships and obligations of the functional organisations. The structure of the sector is set up in such a way that poor performance is contagious,” Ogaji added.