Multibillion Debt Threatens Nigeria’s Biggest Power Plant

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Multimillion dollars debts to banks, gas producers and Korean Electricity Power Company (KEPCO) have constituted a major threat to operations and survival of largest power generation company in Nigeria, Egbin Power Plc. Egbin doubles as biggest single power generating station in Africa with an installed capacity of 1320 megawatts consisting of six units of 220MW each.

Managing Director of the firm, Mr. Dallas Peavey stated that the high debt profile of the company was worsened due to nonsettlement of N100 billion debt, which the Federal Government owes it. “We owe the gas companies and have others like our technical partners (KEPCO) to pay, and importantly our lenders, the banks. “Eventually these unbearable business operating circumstances and conditions would shut us down any moment if it persists. That is the simple but bitter truth,” he said.

He said Nigeria is heading towards another blackout by next week as liquidity, transmission and gas supply issues worsen the company’s operations. Peavey made the disclosure during an interactive session with energy correspondents in Lagos yesterday.

The plant, he added, was also being forced to gradually shut down due to adverse effect of grid instability that endangers its turbines. On the long list of challenges to the company was the inadequate gas supply to generate at optimal capacity, as well as the huge debts owed the company by federal government-owned Nigerian Bulk Electricity Trading (NBET) and Market Operators.

He said: “Egbin power plant is one of the biggest single power generating stations in Africa, with an installed capacity of 1320 MW consisting of six units of 220MW each. “Following the conclusion of the government’s privatisation exercise in November 2013, the consortium formed by the partnership between New Electricity Distribution Company and the Korean Electric Power Corporation (NEDC/KEPCO) acquired Egbin Power Plc.,” he noted.

The Egbin boss said that the effect of the debt has become worse for the company owing to the fact that it is owed N110 billion. “We have made massive investments in making the plant readily available to generate electricity sustainably, but unfortunately, we can’t break even due to the gross inefficiency in the value chain. “The government guarantees to pay us for every megawatt we generate and sell to NBET, but they have not done that.

“We just got paid for the month of December 2016, three months later and we were only paid a paltry 28 per cent out of the total 100 per cent of the verified and accepted invoice for that month. “That is how the outstanding debts kept accumulating for three and half years now.” On transmission, Peavey said the company had reached 1,100MW while the installed capacity is 1,320 MW, adding that the grid could not take the power because of the capability issues within the Transmission Company of Nigeria (TCN) system.

“We are constrained and limited to generate about 350MW daily due to both TCN system operations and inadequate gas supply issues. “So, 70 per cent of our output is lost because available power can’t be evacuated. When you get good news from TCN that you can increase your generation, we will be faced with not “enough gas” and when there is gas, you have TCN issues.

So, you have one, you don’t have the other. “Let me be honest, if Egbin fails, it’s going to be dark as Egbin provides close to 30 per cent of Nigeria’s power. So, let the required intervention be completed and urgently too. However, the Egbin turbines are ready to light up Nigeria,” Peavey said.

Source: NewTelegraphOnline

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