By Derrick Bangura

Nigeria’s federal government announced on Thursday that it had settled approximately N3.5 trillion in power generation companies (Gencos) invoices out of a total of N4 trillion (approximately 87.5 percent) issued by the electricity generators.

According to the Nigerian Bulk Electricity Trading Company (NBET) Plc, a Special Purpose Vehicle (SPV) set up by the federal government to act as an intermediary between power generators and distributors, the amount represents close to 90% of the total debt.
Speaking on the state-owned Nigerian Television Authority (NTA), Managing Director of NBET, Dr. Nnaemeka Ewelukwa, explained that with that amount , the government has shown a strong commitment to keeping the sector afloat despite the challenges of funding.

Although most of the funding is not directly from the federal government, as an intermediary, the NBET collects market remittances for onward payment to the Gencos.
But the new figure runs contrary to the position of the Association of Power Generation Companies (APGC), umbrella body of the Gencos, which during the week stated that the power supply situation in the country was worsening because the generation companies were being owed over N1.6 trillion.

APGC’s Executive Secretary, Dr Joy Ogaji, argued that a situation where the energy dispatched by the power generators is used as an index for power generation capacity was detrimental to the Gencos’ survival.

In the past couple of weeks, the already bad power supply situation in the country had worsened as the players in the sector continued to trade blames as to whose table the buck stops. “Currently, on capacity, we are owed N1.644 trillion,” Ogaji, who speaks for the group stated.
But Ewelukwa, who disputed the figure, maintained that it wasn’t the right time to point accusing fingers, explaining that as a system, the power sector must work together to alleviate the pains currently faced by customers.

“To be very clear, the indebtedness is about one third of that. The government like I said, through NBET has paid close to 90 per cent of what is owed generation companies. So the current debt, just to be clear, is about one third of that. That’s about N555 billion, excluding interest.
“Just to again clarify on the issue of indebtedness, when you hear of NBET’s debts, what I really mean is the sector debt. Now, I mentioned earlier that the total indebtedness stands at about N555 billion, excluding interest.

“Over the 2015 to 2017 markets, when NBET started trading, to date, we’ve received invoices of about N4 trillion from generation companies. Of this N4 trillion, NBET has paid N3.46 trillion and so the balance that you find at the moment, the federal government is working to address holistically the funding challenges of the electricity market,” he stated.
According to him, the federal government has shown “absolute commitment” to ensuring the survival of the power sector by ensuring that even as critical reforms are going on, payments continue to be made to the generation segment to ensure that there’s continuity.

He noted that the government was confronting the challenges in the sector on two fronts: one, by trying to sort out the illiquidity challenges of the market and two, carrying out reforms aimed at sorting out the infrastructural challenges of the power sector.

“So, the narrative regarding NBET role is that NBET is the vehicle through which the federal government is channelling serious funding to what is meant to support the upstream segment of the value chain, that is generation companies,” he stated.

He added that the current issues were neither generation only nor transmission and distribution, but a value chain problem.
To address the issues, he explained that earlier in the week, there was a ministerial meeting of critical stakeholders aimed at ensuring that the sector doesn’t get into a crisis situation, followed by finger pointing.

In his comments, the TCN Acting Managing Director, Mr Sule Abdulaziz, admitted that there have been some issues with the grid, attributable to the fact that “most of the generation stations that are generating light have one issue or the other.”
“Most of the issues are related to the lack of gas. Some of the units out there have no gas to put them on. Some are on general maintenance, whereas we have one or two issues of vandalism.

“A line was vandalised and we lost three units at Okpai. So all these contributed to the number of megawatts that are coming to the grid. For almost two, three years in this country, what we normally have every day is around 5,000 megawatts. Sometimes it will go down to 4,000 megawatts or 3,500 megawatts.
“But with this situation we are in now, the megawatts have run down to almost 3,000 megawatts and 3,000+ megawatts.
“Now the grid is very fragile. It cannot stand all these changes. And unfortunately on Monday, we had system disturbances, meaning that the grid went down. The same thing happened on Tuesday,” he stated.

But he added that the grid had been restored, assuring Nigerians that “we are on top of the situation and things are getting better now.”

“We have an installed capacity of around 13,000 megawatts. So if all these units will work and there are no questions of gas, no question of water on the hydro, we are even able to generate 13,000 megawatts, not even 7, 000megawatts that you are talking about.

“ So, it is just because of some factors, that’s why we’re not getting the required power we need,” he explained.