The 26 power generation companies in Nigeria’s electricity market have linked the slow pace of investments in the expansion of their generation capacities to the huge debt figures in their respective financial books.
The Gencos said the development was scaring away potential investors, and also keeping others who had committed to invest in them, from going ahead with the conclusion of negotiations on the expansion plans.
According to the Executive Secretary of the Association of Power Generation Companies (APGC), Dr. Joy Ogaji, this has been aggravated by the poor financial positions of the Gencos as contributed by the huge debts owed them by the market for electricity supplied.
Ogaji stated this at a press briefing in Abuja where the Gencos also called out the 11 electricity distribution companies for opposing a fresh move by the Nigerian Electricity Regulatory Commission (NERC), to introduce a model central revenue management system, which would enable all players, transparent access to the revenue position of the sector.
She noted that the huge debts in the books of the Gencos have become major setbacks to their capacity expansion plans, adding that while their lenders frequently write to them on this, investors have also stayed away from advancing negotiations on financing future capacity expansions.
“Lenders have written to our members on debts owed them, in fact, our auditors find it quite difficult to deal with the debt figures in our books, they are caught between writing them off as bad debts on carrying them over to new accounting years,” said Ogaji.
Speaking other challenges of the Gencos, Ogaji explained that they were not consulted by the government in drawing up its recent N701 billion intervention fund for them.
According to her, the fund would not meet up the payment obligations to the Gencos within the periods it was planned to cover.
She also noted that past debts to the Gencos was about N500 billion, while requests for foreign exchange from the Central Bank of Nigeria (CBN) to enable Gencos buy spare parts for repairs have not been met by the apex bank.
Also, on the Genco’s call on the government to quickly declare the eligible customers’ clause in the market, Ogaji said: “The move by the regulator to bring about transparency in the market and also the plans to declare eligible customers would bring about better performance in the electricity value chain which in turn would raise sustainable cash flow for all market participants and reduced tariffs due to competitiveness.”
According to her: “Eligibility would introduce competition on the demand side and complete the liberalisation of NESI and improve efficiency, promote national economic development through supplying electricity to the productive sector of the economy, support economies of scale through bulk purchase of electricity, and reduce technical and non-technical losses for bulk high voltage supply.”
She equally added that eligibility would: “Stimulate investment in the sector as generators can sign long term contracts, send a powerful signal that the electricity sector is evolving towards full retail competition, and allow greater variety of suppliers to find innovative ways of discovering and providing what different groups of consumers want in economical ways.”