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Thursday, January 26, 2023

GenCos N1trn Debt May Foil Plans to improve Power Supply

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In recent times, there has been an Impasse on a planned tariff increment between Power Distribution Companies DisCos and Generating Companies or GenCos.

The DisCos have clamored for a delay and their wishes are supported by the National Assembly, while the GenCos have kicked against it and have threatened a force majeure.
GenCos on the other hand, have alleged to being owed a total debt of N1 trillion which is acknowledged by the Nigerian Bulk Electricity Trading Company (NBET), where stranded power which the DisCos fail to take, is accounted for.

The DisCos have explained their stand on the premise that the renewed effort to improve electricity and further expand lines may fail if the sector is not well aligned.

According to them, the sector needs effective coordination and the alignment of all segments being executed by the Transmission Company of Nigeria (TCN), and the Generation Companies (GenCos).

Recall that the Minister of Power, Sale Mamman, had earlier noted that lack of synergy in the sector was affecting results in the industry, stressing that if properly aligned the sector should achieve 7,000MW national grid distribution capacity through the first phase of the Siemens deal.

Similarly, the Chairman of the Senate Committee on Power, Senator Gabriel Suswam, reiterated the call for the coordination of the TCN, GenCos and the DisCos, who are the value chains of the Nigerian Electricity Supply Industry (NESI).

Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), Sunday Oduntan, said such a move would help the country attain electricity supply goals.

Coming on the backdrop of the just-concluded Public Hearing by the Senate Committee on Power, the DisCos noted cases where they are not carried along in the transmission expansion project of TCN even when they are the ones relating directly with electricity consumers, and know where they require power supply the most.

“TCN is building a series of transmission facilities, but they are not in good proximity to the load distribution centres of the DisCos. The farther the transmission facility is to the load distribution centre, the higher the losses, the more the bill for the consumer,” Oduntan said.

Joy Ogaji, executive secretary of the Association of Power Generation Companies (APGC), said: “the DisCos have been arguing that they are not able to take more power because the tariff is not cost-reflective, how come now that a cost reflective tariff has been approved, and it will become effective, the same DisCos ran to the national assembly to lobby for it to be postponed.”

According to Ogaji, total debt owed to the GenCos and acknowledged by the Nigerian Bulk Electricity Trading Company (NBET) is over N500 billion but in their books it has risen to over N1 trillion.

The service-reflective tariff negotiated with operators guarantees that customers, grouped in different service bands, will pay a new set of tariff based on the number of hours they get power daily.

The new tariff plan also empowers customers to demand compensation, which the regulator, the Nigerian Electricity Regulatory Commission (NERC) will enforce, if DisCos fail to provide power for the number of hours agreed daily.

Ogaji said that GenCos were in dire financial strait over poor remittances by DisCos. The situation is worsened because GenCos are compelled to bill for only power requested by the DisCos rather than how much power they can generate (capacity).

She said current generation capacity stands at 8,145MW but the DisCos continue to demand between only 3,000MW and 3,500MW of power daily thereby constraining over 4000mw, the so called stranded power, which is unpaid for.


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