Power companies warn of imminent collapse in Nigeria

The Association of Power Generation Companies (APGC), has warned of imminent collapse of electricity supplies in Nigeria.
The collapse is imminent if the quantum owed the group by Distribution Companies (Discos) are not cleared as soon as possible.
The Executive Secretary of the Association, Mrs Joy Ogaji, revealed that since June, members are yet to get paid for power produced, sold and put on the national grid.
The government-owned Nigerian Bulk Electricity Trading (NBET) Plc buys electricity in bulk from the Gencos through the Power Purchase Agreement and sells to the distribution companies, which then supply it to the consumers.
Ogaji said that many of the Discos had continuously defaulted in their monthly remittances to the NBET, saying out of the N44.85bn invoice sent to the Discos in January, only N6.08bn was received from four of the firms, while seven others paid nothing.
“The Gencos have not been paid since June 2018. How then can the Gencos pay their gas suppliers?
“So, right now, we are being owed and our gas suppliers are also being owed over continuing, Mrs. Ogaji hinted that poor gas supply as a result of the non-payment of invoices would drastically affect power supply in the country which may result to eventual darkness if efforts are not made by Discos to pay up sooner than later.
She added that the outstanding payments include the balance due to the Gencos under the Central Bank of Nigeria’s N213bn Electricity Market Stabilisation Facility; unpaid invoices from January 2015 to December 2016, with accrued interests; and interest payments due on the outstanding invoiced amounts.
“The terms of the Power Purchase Agreement between the Gencos and the NBET clearly provides for interest payment on invoices not paid within the period (45 days) stipulated by the PPA. Furthermore, it is a commercial aberration for a party in a commercial transaction, who is owed and denied the benefit of its money, not to be entitled to interest payment.
“The Gencos’ PPA with the NBET also provides for capacity payment, which is not being made.
Capacity payments are global norms in the electricity supply industry and play critical roles in enabling the Gencos to optimise their power generation capacities and making such capacities available when called upon.
Beyond available capacity, the Gencos are also entitled to payment for deemed capacity.
“The result of the foregoing is that the 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 the gas supplied to the Gencos.
This has accounted for the sub-optimal growth, inefficient operation and the current dire situation of the Gencos, which has huge negative impact on the entire power sector.”
Analysts say gas producers had in the last few months upgraded their supplies but debts pile up is frustrating their stability.
Source: Business Highlights
http://businesshilights.com.ng/darkness-imminent-as-gencos-owe-gas-suppliers-over-n1tn-since-june-ogaji/