Gencos demand N1 trillion payment for power generation from FG

Power generating companies (GENCOs) are demanding  from the federal Government  the payment of N1 trillion owe to avoid relapse in their operation any time soon.

They said the failure to pay the GENCOs their entitlement for electricity generated by them which have since been consumed by electricity consumers in Nigeria has continued to have huge negative impact on the GENCOs and their power plants such that the GENCOs corporate existence has come under and remains under severe threat.

The total amount owed the GENCOs for electricity generated and supplied by them is approximately N800bn but with capacity and interest payments due to them, the GENCOS are owed in excess of N1 trillion.

This demand was  contained in a  letter dated February 13 2018, and addressed to Babatubde Raji Fashola, Minister of Power, Works and Housing, in which the Gencos noted that as difficult as the situation the FG foisted on them was, they (GENCOs) extended an uncommon understanding as patriotic and faithful Nigerians trusting that together, the FG would work with the GENCOs to resolve teething problems of the sector and by so doing ensure steady electricity supply in no too distant future.

Some of the other demands the GENCOs are  making as stated in the letter are as follows: Confirmation of a plan for 100% payment of all outstanding indebtedness and interests due to the GENCOs for electricity supplied and ancillary services provided by them, 100% payment (not 80% payment) of all invoices to be submitted by GENCOs under the payment assurance program.

 Other include Payment of all sums due as capacity charge to the GENCOs from 2013 till dateNon-admission of any additional beneficiary into the 701 billion assurance facility without corresponding increase in the facility amount, Payment of the balance of 213 billion from CBN Electricity Market Stabilization Fund  and removal of all administrative bottlenecks delaying drawdown of payment assurance funds.

They noted that notwithstanding their commitment to the development of the power sector,not addressing the issues raised in their letter and their demands would inevitably affect the GENCOs capacity to continue to generate electricity.

However another twist has been added to this development as the companies have instituted a legal action against the Federal Government of Nigeria for deliberately meting out discriminatory treatment to GENCOs and their gas suppliers with intent to harm the business interests of the GENCOs, and conferring preferential treatment on Azura Power West Africa Limited and Accugas Limited to the detriment of the Nigerian Electricity Supply Industry and the Power Sector as a whole.

The suit filed at the Federal High Court, Abuja has the GENCOs represented by Mainstream Energy Solutions Limited (“Mainstream”), Transcorp Power Limited (“Transcorp Power”), Egbin Power Plc (“Egbin”) and Northsouth Power Company Limited (“Northsouth”) who are all Plaintiffs in the suit.  Sued as defendants in the suit are the Federal Government of Nigeria (FG), Central Bank of Nigeria (CBN), Minister of Power, Works & Housing, Nigeria Bulk Electricity Trading Plc (NBET), Azura Power West Africa Limited (“Azura”) and Accugas Limited (“Accugas”).

The GENCOs are worried that the  government appears not to be concerned about the destructive effect of these discriminatory practices on the power sector as a whole. They are also worried that such discriminatory practices appear to be enjoying the tacit endorsement of the World Bank, which has IFC as an investor in Azura, and could unduly influence decisions to protect their interests to the detriment of the entire power sector. 

 They claimed they resisted all attempts to make the N701bn Facility appear to the public as a privilege and favour to the GENCOs. The GENCOs insist that while they appreciate the introduction of the N701bn facility, it is not a privilege and neither is it a favour to them as they are entitled to full payment for electricity generated by them at their respective costs and supplied to the national grid.

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