Six electricity power generation companies across the country have concluded plans to declare force majeure over a N140 billion debt for power generated and not paid for, Daily Sun learnt yesterday.
Force majeure is a contractual and legal announcement, which is used to declare the inability of a party to meet up with a contractual obligation with another party in business.
The six power generation firms, including Egbin Power Limited, Transcorp Power, Shiroro, Geregu, Sapele and Kainji/Jebba, are being owed the N140 billion by Nigerian Bulk Electricity Trader (NBET), a wholly owned agency of the Federal Government.
This is so because NBET purchases electricity from the generating companies through Power Purchase Agreements (PPAs) and sells to the distribution companies through vesting contracts.
A further breakdown of the N140 billion debt profile, which are financial obligations from the Central Bank of Nigeria (CBN) and NBET showed that Egbin Power Limited is being owed N68.71 billion; Transcorp Power, N28.29 billion; Shiroro, N9.66 billion; Geregu, N7.975 billion; Kainji/Jebba, N20.94 billion and Sapele, N9.90 billion.
But NBET, through its General Manager and Head, Power Procurement and Power Contracts Management, Mr. Longe Yesufu Alonge, said the agency paid N186.7 billion to the GENCOs with only about N156 billion remaining. It said the company made the payment of N186,556,636,647 from February 2015 to April 2016, while the outstanding payment to the GENCOs from February 2015 to April 2016 is N155, 768, 549, 056. Alonge pointed out that the payment performance of NBET from February 2015 to April 2016 was 54.50 per cent and not the average of 40 per cent being claimed by the GENCOs. He also said that NBET paid the sum of N21 billion from its capitalisation to reduce the debt it owes the GENCOs. He further explained that the company has not paid the outstanding due to the challenges in the power sector.
But the GENCOs said the last payment from NBET was on July 17, 2016 as against the April 2016 date claimed by NBET and covered 28.60 per cent of April invoice, adding that the payment was made 78 days after due date of invoice, as opposed to a maximum of 45 days contractually.
The GENCOs equally urged NBET to make all collections from consumers more visible and accessible to all stakeholders in the energy business
The GENCOs, however, lamented that they have been at the receiving end of the lapses and deficiencies in the Nigerian power sector, as well as the seemingly insurmountable challenges of operating within the sector.
‘‘The fact is that GENCOs have been and do remain far more vulnerable than any other player in the electricity supply value chain. For whatever reason, very little has been put in place to give the GENCOs a legitimate chance of survival based on the realities on ground.
While the GENCOs have been carrying the burden of ensuring that the power sector remains functional, and hoping that the obvious gaps, deficiencies and threat to their existence would be addressed, we are presently cringing under the excruciating pains of carrying this burden,’’ the GENCOs lamented.
The GENCOs explained that since takeover of the power generation assets, availability of good quality gas has always been a major issue, adding that the situation has taken a turn for the worse in the last six months, due to the rising cases of pipeline vandalism and insecurity around gas producing and transportation assets, which have further diminished the supply of gas to generation plants, thereby crippling the system.
According to them, all the issues surrounding gas infrastructure have resulted in a cumulative stranded capacity of 5,000 Mega Watts (MW) being recorded everyday, regretting that the impact of this is better appreciated by the fact that the total power generation capacity as at today should have been close to 8,000MW as opposed to 2,800MW.
They equally contended that there is a need for the Federal Government to significantly invest in the transmission sector to ensure an equal level growth across the industry, noting that the generating sector was already witnessing some crises due to inadequate transmission infrastructure.