Gencos Kick Against Reversing the Privatisation of the Power Sector

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SWITZERLAND, JUNE 08 – Electricity Generation Companies (Gencos) in the country have yesterday rebuffed the call made by the Senate to reverse the privatisation of the power sector.

The Senate President, Ahmed Lawan, recently called for the reversal of the power sector privatisation, which according to him, had failed to deliver electricity to Nigerians since the sector was handed over to them.

Responding to this call, the Gencos revealed that the power sector’s debt to electricity producers had risen to about N1tn since November 2013 when the industry was privatized.

Executive Secretary of the Association of Power Generation Companies (APGC), Dr. Joy Ogaji, in a statement in Abuja, argued that instead of seeking to upturn the privatisation of the sector, the Senate should look into how the current challenges can be sorted out.

Opposing the position of the Senate, the Gencos argued that reversing the 2013 privatisation exercise of the sector was not the solution to the current abysmal status of the power industry.

They complained that close to seven years after privatisation, a number of the guidelines stipulated in the governing contract have still not been activated, leading to non-payment for power generated and supplied to the national grid.

“This has led to a huge outstanding debt of approximately N1tn owed to Gencos from the inception of privatisation till date,” they explained.

The power producers said they only received a payment of between 11 to 30 percent of their invoiced amount on a monthly basis leaving out huge outstanding receivables and arrears in excess of 1,000 days after invoicing without taking cognisance of the interest on delayed payments and foreign exchange volatility.

The APGC argued that even in the face of national grid constraints, outstanding debts owed by the federal government and failure of government agencies and other operators in the power value chain to honour their commitments, its members had continued to deliver.

These Gencos have gone as far as taking loans and other credit facilities to fund their capital expenditure required to meet the minimum performance threshold by ramping up capacity.

“To this end, we view the call by the senate to cancel the privatisation exercise as premature and as such focus should be on the structural issues that we have highlighted above.

“Most importantly, emphasis should be placed on fact-finding with respect to commitment of the various stakeholders in the fulfillment of contractual obligations that were drawn up to guide and regulate the privatisation of this all-important sector,” they said.

Although the Gencos empathised with Nigerians over the poor state of power supply, it noted that the current situation was adversely affecting its operations and jeopardising its investments.

The APGC mentioned that the situation had a very high potential to negatively impact the inflow of foreign direct investments to the country.

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