Gencos list six conditions to be met by FG to avoid shutdown

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Power generation companies (Gencos) in Nigeria have listed six conditions that must be met by the federal government or they shut down their operations.

This is coming as the distribution companies (Discos) have kicked against the federal government’s selection of the Transmission Company of Nigeria (TCN) to manage the N72 billion financial investments it intends to inject into the distribution network nationwide.

The Discos have also identified low power transmission caused by the persistent directive from the National Control Centre (NCC) to generation companies to generate electricity below optimal level as a major hindrance to the country’s drive towards efficient power supply and called on the federal government to urgently tackle the transmission challenges.

One of the six conditions handed over to the federal government by the Gencos is the immediate payment of the outstanding balance due to them under the N213 billion Nigeria Electricity Market Stabilisation Facility (NEMSF) created by the Central Bank of Nigeria (CBN) in 2013.

The second condition is that the Gencos also want the federal government to pay them the outstanding balance for power generated as at January 2015 before the Transition Electricity Market (TEM) took off, as well as outstanding invoices for power supplied to the grid between February 2015 and December, 2016 with accrued interests.

They also seek capacity payments for the period February 2015, to date, payment for deemed capacity for the period 2013 to date, and the setting up of an effective financing plan which would kick off after the completion of the N701 billion assurance facility set up by the government to sustain payments of invoices until 2021, when the government estimated the power market would be self-sustaining.

Speaking yesterday through a statement by the Secretary of the umbrella body of the Gencos – the Association of Power Generation Companies (APGC), Dr. Joy Ogaji, the power producers explained that contrary to the impressions being created in some quarters, they have not been better off with existing financial intervention schemes initiated by the federal government.

“Gencos without equivocation are stressing the need for government and relevant stakeholders to tackle the operational inefficiency and liquidity challenges plaguing the entire value chain and making the sector unattractive for investment by: expediting the process of payment of the outstanding balance due to Gencos under the CBN N213 billion Electricity Market Stabilisation Facility.

“Payment of the outstanding for January 2015 (invoice unpaid with Market Operator before TEM); outstanding/unpaid invoices from February 2015 to December 2016 with accrued interests; payment for available capacity for the period 2015 February to date; payment for deemed capacity for the period 2013 to date; putting in place an effective financing plan to kick in upon the exhaustion of the N701 billion payment assurance facility to sustain payments of invoices till 2021, when federal government projects that the NESI would be self-sustaining,” the statement said.

The Gencos noted that there was a plan by the federal government to provide them with World Bank Partial Risk Guarantees (PRGs) supported by sovereign guarantees from Nigeria at the inception of the power sector privatisation exercise, adding that such financial instrument has become inevitable.

“Without such instruments and the required sovereign backing, it becomes impossible for any bank or financial institution to provide any funding or credit accommodation to any Genco, yet there is an obvious need for substantial additional investments and funding to develop the NESI and put the electricity market on the right growth trajectory,” the Gencos added.

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