Power Sector: Discos Claim Revenue Shortfall Now N809bn


The 11 electricity distribution companies (Discos) in the country Wednesday stated that the revenue shortfall in the market has reached N809.8 billion.

They also picked holes at the federal government’s recent approval of N701 billion for the Nigerian Bulk Electricity Trading Plc (NBET) to pay generation companies (GenCos) for services rendered.

Speaking through their trade association, the Association of Nigerian Electricity Distributors (ANED), the Discos claimed that the amount which covers from November 1, 2013 when the new owners of power companies took over to date includes, a balance of N90.41 billion from the N213 billion intervention by the Central Bank of Nigeria (CBN) to pay-off gas supply legacy debt.

ANED’s Director of Research and Advocacy, Mr. Sunday Oduntan, who told journalists this in an interactive session in Abuja, urged the government to extend its interventions to all segments of the electricity supply chain rather than focusing solely on the Gencos.

Describing the N701 billion intervention for the Gencos as “too little, too partial,” Oduntan said it was necessary for the government to take a holistic approach towards resolving the liquidity problem of the power industry.
He noted that it was impossible to expect Discos who buy power at N68 per kilowatt (kw) to sell to at N31/kw and still make enough money to keep the sector liquid.

While also urging the government to increase its investment into the Transmission Company of Nigeria (TCN), Oduntan pointed out that most of the supply challenges in the supply chain were from poor and obsolete transmission infrastructure.

He stated: “Let me start by commending the federal government for coming on board to help part of the value chain, the upstream with that N701 billion intervention fund. But as you must have seen in our reports in the past two weeks, we say that intervention is too little, too partial and you cannot take care of the upstream while neglecting the downstream. But we commend them.”

“The government should make effort to urgently and critically support the entire value chain in order to make the Nigerian Electricity Supply Industry (NESI) commercially viable.

“Secondly, the N701 billion intervention fund is a good start but without a holistic resolution and details on how the intervention will work we will not make progress. So, that for Discos in the downstream sector, if we are buying a product for N68 and I am only allowed to sell it at N31.50, then there is no way it can be commercially viable,” he added.

Meanwhile, the management of Egbin Power Plc has threatened to shut down operations next week as a result of non-settlement of N110 billion debt, inadequate gas supply and what the company called the inefficiency in operations of the Transmission Company of Nigeria (TCN).

The Managing Director of the company, Mr. Dallas Peavey, who raised the alarm yesterday, told journalists that the country was heading towards another blackout as liquidity, transmission and gas supply issues threatened its operations.

Peavey, who spoke against the backdrop of current drop in Egbin’s generation to 350 megawatts, said the plant was being forced to gradually shutdown due to adverse effect of grid instability that endangers its turbines.
On transmission, Peavey, said the Egbin had hit a generation of 1,100 megawatts, 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 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.

He said that another challenges 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 Traders (NBET) and Market Operator.
According to him, Nigeria’s electricity supply may get worse in the coming weeks as liquidity, transmission and gas supply issues are threatening the operation of its biggest power station, Egbin.

“Egbin power plant is one of the biggest single power generating stations in Africa, with an installed capacity of 1320 MW consisting of 6 units of 220MW each. Following the conclusion of the government’s privatization 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, ‘’ Peavey explained.

The Egbin boss said that the effect of the debt has become worse for the company owing to the fact that it is owed N110billion.

“We owe the gas companies and have others like our technical partners (KEPCO) to pay, and importantly our lenders, the banks. 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. Asked what will be the effect, if the debt is not paid,” he further explained.
Peavey said these unbearable business operating circumstances and conditions will shut us down any moment if it persists.

“That is the simple but bitter truth,” he added.

Source: ThisDay

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