How Over N400b Debts by DisCos Crippled GenCos

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There are fresh insights as to why the operations of the different power generation companies (GenCos) across the country have been rendered prostrate.

The Nation can authoritatively report that the over N400billion debts incurred by the various electricity distribution companies (DisCos) has almost crippled the activities of the GenCos.

In a recent interview, Dr Joy Ogaji, the pioneer Executive Secretary, Association of Power Generation Companies (APGC) had disclosed that GenCos are being owed over N400billion in accumulated debt for power generated and supplied from 1st November 2013 till date, thus reducing their ability to pay for gas and maintain their plants amongst other obligations.

On plans by the GenCos to bypass the Discos and supply power directly to certain class of customers due to the huge indebtedness by the Discos, Dr. Ogaji, who spoke through her media aide, Ogechi Okorondu said it was an option being considered.

“Following the high liquidity in the market, the GenCos are seriously considering alternative ways to sell power to Eligible Customers. The Nigeria Electricity Act 2005 makes provision for GenCos to generate and sell electricity directly to Eligible Customers. This action is in sync with the President’s directive that Nigerians think outside the box, GenCos are thinking.”

While reacting to an evaluation/assessment report carried out by the Nigeria Electricity Regulatory Commission which scored the various GenCos and Discos below 30 per cent, the APGC boss said the NERC should take into consideration the daunting challenges confronting the GenCos since privatisation before doing such assessment.

“When generation companies were invited to buy these assets, the government promised that the bulk trader set up to take the power said the GenCos should not worry about payment, but now the bulk traders have failed. Despite the over N400billion debt owed the GenCos they have continued to generate power.”

She was however quick to add that the NERC has justification to fine if Discos or GenCos failed to observe their contractual agreement terms for privatisation. “NERC said it had imposed some fines, totalling $4.2 million on eight Discos for breaching some regulation guidelines in 2016 alone. There were reports that some Discos were turning down their electricity load allocations thereby leading to low supply to consumers.”

On claims that both government agencies and departments are not supporting the Discos and GenCos to perform optimally, she said: “There is need to strengthen the regulatory frameworks to avoid inconsistencies. About 60% of the sector issues are caused by the regulator.”

The way forward out of this precarious situation, she said is for the government to prevail on DisCos to meter their customers and be active in revenue collection. “There are many people who are not captured by the DisCos and, as a result, get estimated bills, thereby making the DisCos to lose money. The government should also ensure to pay off all monies accruable to the GenCos from International Customers. In addition, we implore the Minister of Power to Declare Eligible Customers.”

 Source: The Nation
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