Electricity Generating Companies, GENCOs, have presented a seven-point demand to the Federal Government asking for an immediate end to electricity rejection by National Control Centre, NCC, Osogbo, Osun State, in collaboration with the Electricity Distribution Companies, DISCOs.
The GENCOs have also demanded a re-denomination of the annual concession fees from dollars to Naira, citing difficulty in accessing foreign exchange.
A highly competent source told Vanguard that the demand of the electricity generation companies was presented to Acting President, Prof. Yemi Osinbajo, at a meeting in Abuja, last Friday. electricity It was gathered that the GENCOs meeting became necessary in order to arrest the debilitating state of the nation’s electricity sector, which fortunes have nosedived, lately. “Operators of the GENCOs”, our source disclosed, “lamented that their efforts were being frustrated by the practice of electricity rejection coordinated by the NCC, following persistent refusal of DISCOs to take power.
“Available power is 6,000 MW, while evacuation is merely about 4, 000 MW. The case is very bad because it has grave consequences for the industry and national security. “Asking GenCos to ramp down (reduce) power generation means that the companies suffer loss on their investments. “According to the concession agreement with the Federal Government, GenCos are supposed to be paid for every power they generate. But that is not the case. “When they are asked to reduce the power being put on the national grid, what happens is that the unutilised power becomes a loss to the GenCos.
We are not paid for that power. “Nigerians may be complaining that there is no power but this is the real situation. What we have available is not being utilised as at today.” GENCOs warn The GENCOs also warned the Federal Government that persistent requests to ramp down power generation by the NCC could lead to flooding, especially as the hydropower plants would be expecting a very high volume of water from the Futa Jalon Mountains in Senegal, the source of River Niger, on which Kainji and Jebba dams were built.
It said: “If the water is not utilised in power generation, it could lead to massive flooding. The water spillage through the Spillway Way Gate could have attendant consequences for the communities along the river. “The ramp down is not in the interest of the generating companies nor in national interest because the nation needs power and cannot afford flooding, especially in the coming months of September and October.”
Our source equally disclosed that the failure to settle GenCos’ invoices even for the power that was utilised by the Discos constitutes a major impediment to their operations. According to him, Prof. Osinbajo was told in clear terms that the GenCos could not continue to operate when their invoices are not being paid. Currently, they are being owed about N600 billion. The group also asked that the balance payment of about N213 billion of the Power Sector Special Intervention Fund still held by the Central Bank of Nigeria (CBN) be released to boost liquidity in the sector. As learned, the GenCos also urged the Federal Government to release in full, the N701 billion recently approved for the Power Sector Payment Assurance Fund to clear the five-month backlog of unpaid invoices.
About 20 per cent of that fund is said yet to be released. Faced with the scarcity of foreign exchange for the purchase of their equipment, the GenCos have demanded a review of the concession fees with a view to making the payments in Naira, rather than in Dollars, as contained in the agreement. According to our source, “the position of the GenCos was that the CBN has failed to make any speciation provision for them in terms of foreign exchange allocation, as has been done in respect of several other sectors.
They argued that even when they have Naira to place orders for their operational items from abroad, they are hardly able to obtain enough foreign exchange to meet their needs. “In that light, payment of concession fees in foreign exchange further compounds their problems and they have told the Acting President that it is in best interest of the economy to review that provision of the agreement and re-denominate the fees.”
As learnt, intermittent gas pipeline vandalism has continued to affect the operations of the GenCos, especially the thermal plants which rely on gas to generate electricity. The Operators made a demand on the federal government to take necessary steps to ensure an uninterrupted gas supply to the plants to enable then take full advantage of the large market in the country, as consumers currently remain unsatisfied with the level of power supply. The GenCos also told Prof. Osinbajo that the permanent solution to the liquidity problem in the power sector remained cost-reflective tariff and targeted subsidies.
It was learnt that the strategy would be for high net worth consumers and commercial concerns to pay cost-reflective tariff, while low income earners, especially the rural poor and their counterparts in city slums who require minimal consumption to enjoy government subsidy. Remittances from International Consumers was one of the issues for which the GenCos also asked for a review.
Since the International Consumers pay in foreign exchange, they demanded that the receipts for power consumption from that category should be passed to them in foreign exchange, rather than in Naira, as that could assist in their foreign market operations. Nigeria exports electricity to some neighbouring countries including Benin Republic. Prof. Osinabjo was said to have assured that the current administration would take every necessary step towards scaling up electricity supply, noting that it remained the single factor for massive industrialization of the nation.