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Government owes generation companies N701b in two years

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Power (Energy)

About N701 billion invoices submitted by the electricity generation companies (GenCos) between the last quarter of 2016 and third quarter of 2018 is yet to be settled by the Nigerian Bulk Electricity Trading (NBET).

NBET, managed by Dr. Marilyn Amobi, was set up in 2010 as the administrator of the country’s electricity pool. It buys electricity in bulk from GenCos and sells to the country’s 11 electricity distribution companies (DisCos) and international customers.

Statistics published by the organisation revealed that while invoices submitted by the GenCos stood at N499.78 billion in the first eight months of 2018, NBET only paid about N130 billion, leaving a debt of about N369.78 billion.

In 2017, while the GenCos sold electricity worth N530.26 billion to NBET, only N338.775 billion was paid, leaving a debt of N191.4 billion.

Available records for 2016 showed that electricity worth N221.03 billion was sold to the government agency, but only N80.55 billion was remitted to power firms, leaving a deficit of N140.48 billion, which brought the total to 701.66 billion in the period under review.

The statistics, which showed the financial burden in the sector that was privatised in 2013, revealed that poor remittance by the DisCos remained a major barrier, as the firms recorded only an average of 25 per cent remittance.

Though the Federal Executive Council (FEC) had in 2017 approved a N701 billion Central Bank of Nigeria (CBN) facility to ameliorate liquidity crisis affecting the GenCos, the executive secretary, Association of Power Generation Companies (APGC), Joy Ogaji, said NBET had consistently defaulted in paying for electricity generated, in breach of its contractual obligation.

Ogaji, who had described NBET as a smokescreen, said there had been no guarantee on payment despite the investment by the GenCos.

“The distribution companies have given several reasons on their inability to collect and remit sufficient market funds on electricity sold. I want Nigerians to ask themselves why generation companies should continue to recover capacity given the above challenges in addition to the abysmal state of payment for power generated.”

“The current market, at best, can be described as that of an unwilling buyer and a willing seller, a situation where GenCos are ready to generate and sell power, but lack a willing and capable buyer; a market where Nigerian Electricity Regulatory Commission (NERC) and Transmission Company of Nigeria (TCN) beg the DisCos to take power and after selling, they are begged again to pay.”

“There’s a disconnect. Government needs to urgently focus on improving the distribution and transmission network to a level of both exceeding the available generation by more than 2,000 megawatts (MW) in addition to dealing with payment for the power. Since decisions about investments in power generating capacity depend on expected returns and costs, collection and remittance uncertainty is a problem,” Ogaji said.

Insisting that the DisCos were not to blame for the prevailing situation, executive director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), Sunday Oduntan, said “a holistic approach involving all stakeholders is needed to address the challenges in the sector.”


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