Blackout looms in Nigeria as Power Generation Companies (GenCos) are threatening to down tools over N2trn electricity debt.
While urging the Federal Government to address the debt, the GenCos emphasized that 90 per cent of their monthly invoices remain unpaid.
They lamented that the issue is currently endangering the continued operation of their power generation plants hence requesting that “immediate and expedited action be taken to prevent national security challenges that may result from the failure of the GenCos to sustain steady generation of electricity for Nigerians.”
According to a statement signed by its Board Chairman on Sunday, Colonel Sani Bello (retd.), the GenCos are currently owed over N2 trillion for the power they generated, put into the national grid, and consumed by end users.
And this is in addition to the over 1.7 trillion naira, funding gap created in the recent supplementary MYTO order 2024 without a designated fund to fill the gap.
The statement read, “Even 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 has continued to be consumed in full without corresponding full payment.
“The GenCos therefore called on 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 threatens the continued operation.
“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, GenCos also are operating under very harsh monetary and fiscal conditions, occasioned by the economic realities that face the country today.”
Continuing, the group said in the statement that, “The flow of money within the power industry is one of the fundamental problems preventing Nigerians from enjoying continued and sustainable improvement in electricity supply.
“Expeditiously solving these issues would enable GenCos to meet their critical needs which would, in turn, ensure that they sustainably generate power, to enable Nigerians to have better access to reliable electricity supply. GenCos would like to re-emphasise that this request requires urgent attention.”
The group stated further, “The power generated by GenCos has 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.”
The group further reaffirmed that “GenCos are currently owed over two trillion Naira for the power they generated, put unto the national grid, and consumed by end users.
“This is in addition to the over 1.7 trillion 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, employee-related obligations etc.
“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, the importance of a specialised window or stable dollar allocation option for the GenCos cannot be overemphasized.”
The statement also quoted the group as saying, “GenCos are of the position that there is a 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.”
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