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Averting looming electricity crisis

By Editorial Board
07 October 2019   |   4:24 am
A Looming national power outage over disagreement between the Electricity Generating Companies (GenCos) and the Nigerian Bulk Electricity Trading Plc (NBET), over payment of administrative charges should be averted to save the nation from plunging into further darkness.

electricity grid

A Looming national power outage over disagreement between the Electricity Generating Companies (GenCos) and the Nigerian Bulk Electricity Trading Plc (NBET), over payment of administrative charges should be averted to save the nation from plunging into further darkness.

Nigerians have suffered untold hardship arising from epileptic power supply and can’t afford more disruptions. What is at play, unfortunately, is lack of synergy between service providers and government agencies that ought to collaborate to deliver public good to the people. Unnecessary power tussle, presumably, fuelled by selfish corrupt interest, might be the bone of contention rather than desire to improve power supply.
Let’s be clear on this puzzle: Is there no laid down procedure for making the transactions in question?  How has this been conducted before now?  What brought about the 0.75 per cent administrative charge on transactions that the NBET is demanding? Has this charge always been there or is it a new imposition from the NBET? These and other pertinent questions need to be asked in order to resolve the issue.

Indications emerged, the other day that the GenCos threatened to declare force majeure, should the NBET stick to its guns that they must pay 0.75 per cent administrative charge on transactions. This has raised serious concern, with, particularly, the GenCos, which are wondering why.

For instance, it is calculated that with the administrative charge on every transaction, NBET will be raking in a whopping N2.7 billion from the disbursement of the N600 billion power-sector intervention fund.

According to reports, NBET had on September 13, 2019, issued a letter to individual thermal Gencos, directing them to obtain, as a matter of urgency, their respective board approvals or resolutions, bequeathing responsibility for the payment of gas and transportation to the respective supply companies for an administrative charge of 0.75 per cent.

The letter gave each GenCo three working days ultimatum to respond with the board resolution or face non-payment of energy invoices.NBET, it should be noted, like other market participants, is a licensee of the NERC and as such is expected to understand that in a regulated market, every cost must be backed by a regulatory approval for effective computation of the market tariffs.

The GenCos said they were not aware that such approvals had been issued by the Nigerian Electricity Regulatory Commission (NERC), nor was there any policy directive to that effect.

While addressing reporters under the aegis of the Association of Power Generation Companies (APGC), its Executive Director, Mrs. Joy Ogaji, quoted the NBET as saying that it was acting on the presidency’s directive.The APGC managing director, who described the NBET directive as a usurpation of the role of the (NERC), added that the enforcement of the unilateral decision was impossible for a market licensee.She said: “The time may just be right for GenCos to declare force majeure and release themselves from all obligations. Surely, GenCos will remain blameless for taking such action.”

According to her, NBET has made the charge as a condition for the disbursement of the N600 billion interventions for gas suppliers and GenCos. Thus, except the charges are paid, the GenCos would be starved of crucially needed funds already approved by the Federal Government. This is unacceptable. But reacting to the APGC allegations in a rather flimsy and personal manner, NBET’s Managing Director, Marilyn Amobi, said she didn’t know what Mrs. Ogaji was talking about, stating that NBET deals with generation companies and never with Joy Ogaji and her association.

This response, as could be observed, failed to address the point at issue, which is whether or not a 0.75 per cent administrative charge has been imposed on GenCos, its justification and who authorised it. There is need to clarify issues in public interest.It is regrettable that at a time when ten power plants are reportedly idle, with power tumbling to a record miserable 2,866 megawatts for a big country with 200 million people, those whose duty it is to provide power are busy fighting over money approved by government. This is not a good face of Nigeria badly in need of critical infrastructure to lead the black race.

Information released by the Nigeria Electricity System Operator the other day showed that six plants built under the National Integrated Power Project (NIPP) did not generate any megawatt. These include Sapele, Alaoji, Olorunsogo, Omotosho, Ihovbor and Gbariam. The others are Afam IV&V, Ibom Power IPP, AES IPP and ASCO IPP.

As at mid September, 21 of the nation’s 27 power plants could only generate 3,072 MW due to low load demand by the DisCos and line constraints. The power plants were forced either to shut down some of their units or reduce generation, thereby worsening the blackout being experienced nationwide.Also, the national grid has reportedly recorded nine total collapses this year with four in January and one each in February, April, May, June and August.

The DisCos are lamenting the poor power generation, which has adversely affected delivery. They blame the near total power outage on the low energy from the national grid even as consumers lament. The DisCos suffer shortfall in their revenue, as most consumers have refused to pay the outrageous electric bills. But why issue bill when there is no power supply?

It is unfortunate that there is no indication that the power sector will work soon. What is imminent, as it were, is total collapse. It is time for state governments to do something on their own in their people’s interest. This is where federalism comes in handy as solution.Power sector federalism should be the redemption song because there is no indication that the power infrastructure, which politicians sold to themselves and their cronies in the name of privatisation will ever work. But the country should not be made to remain in darkness. Something has to be done about this resilient reproach called electricity crisis. The infighting between GenCos and NBET should be resolved to reduce people’s suffering. This is a time the people should feel the impact of government of the day.