Power generation companies (GenCos) in the country have listed six conditions that must be met by the Federal Government in order to avert a nationwide blackout.
The first condition set by the GenCos for immediate consideration of the government is the payment of the outstanding balance due to them under the N213 billion Nigeria Electricity Market Stabilisation Facility (NEMSF) facilitated by the Central Bank of Nigeria (CBN) in 2013.
The power generating companies, through a statement issued on Sunday and signed by Secretary of the Association of Power Generation Companies (APGC), Dr. Joy Ogaji , also demanded that government should pay them the outstanding balance for power generated as at January 2015 before the Transition Electricity Market (TEM) commenced, as well as outstanding invoices for power supplied to the grid between February 2015 and December, 2016 with accrued interests.
In addition, the Gencos also sought capacity payments for the period February 2015 till date, payment for deemed capacity for the period 2013 to date, and the setting up of an effective financing plan which would kick off after the completion of the N701 billion assurance facility set up by the government to sustain payments of invoices until 2021, when the government estimated the power market would be self-sustaining.
Ogaji stated that contrary to the impressions being created by the government, the entities had not really improved their funding situation through the various existing financial intervention schemes initiated by the government, warning that unless the demands by the companies are urgently addressed, the nation may be plunged into blackout.
She maintained: “Gencos without equivocation are stressing the need for government and relevant stakeholders to tackle the operational inefficiency and liquidity challenges plaguing the entire value chain and making the sector unattractive for investment by: expediting the process of payment of the outstanding balance due to Gencos under the CBN N213 billion Electricity Market Stabilisation Facility.
“Payment of the outstanding for January 2015 (invoice unpaid with Market Operator before TEM); outstanding/unpaid invoices from February 2015 to December 2016 with accrued interests; payment for available capacity for the period 2015 February to date; payment for deemed capacity for the period 2013 to date; putting in place an effective financing plan to kick in upon the exhaustion of the N701 billion payment assurance facility to sustain payments of invoices till 2021, when federal government projects that the NESI would be self-sustaining,” the statement added.
The Gencos’ scribe recalled that there was an initial plan by the Federal Government to support the entities with World Bank Partial Risk Guarantees (PRGs) supported by sovereign guarantees from Nigeria at the inception of the power sector privatisation exercise, pointing out that extending such a funding lifeline to the companies have become urgent now.
According to her, without such instruments and the required sovereign backing, it has become impossible for any bank or financial institution to provide any funding or credit accommodation to the Gencos, even when there is an obvious need for substantial additional investments to develop the NESI and put the electricity market on the right growth trajectory.
The latest demand of the GenCos is coming in the face of power distribution companies’ (Discos’) opposition to government’s appointment of the Transmission Company of Nigeria (TCN) to manage the N72 billion financial investments it intends to inject into the distribution network nationwide.
