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GenCos Want NBET Scrapped Amid Rising Debt

Power generation companies in the country have called for the scrapping of the Nigeria Bulk Electricity Trading Plc amid rising debt owed to them for the electricity generated, sold and fed into the national grid.

The government-owned NBET buys electricity in bulk from Gencos through Power Purchase Agreements and sells through vesting contracts to the distribution companies, which then supply it to the consumers.

We reported in March that Gencos were owed N364.11bn by NBET for the electricity generated, sold and fed into the national grid from January to October last year, according to data from the bulk trader.

The Executive Secretary, Association of Power Generation Companies, the umbrella body for the Gencos, Dr Joy Ogaji, in a telephone interview with our correspondent, said the bulk trader was paying Gencos far less than the invoices given to it.

Noting that the N701bn payment assurance guarantee had ended since December, she said, “So, most of the Gencos do not have loan facilities to buy gas; we are back to the 24 per cent payment.”

The Federal Government, in March 2017, launched the Power Sector Recovery Programme with the major highlight being a Central Bank of Nigeria-funded payment assurance guarantee for two years to the tune of N701bn. The fund, which was expected to cover the shortfalls of NBET, was targeted at Gencos and gas suppliers for power generated and future power generation.

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Ogaji said, “We have heard about the new payment guarantee being planned by the government since November. But if government is coming up with another payment guarantee, the position of the Gencos is that it should be tied to performance so that it will be sustainable.”

She noted that NBET was set up to provide buffer to ensure 100 per cent payment to Gencos for the power generated, sold and fed into the grid.

She said, “From day one, NBET has not been able to perform that role as a buffer provider. So if you ask me, I don’t see the role of NBET in the market, except if government can restructure its role.

“We generate power and put it on the grid through the transmission; distribution companies take the power and sell it, and we don’t know what happens to the money. The role of NBET is to put in place mechanism that will make the Discos return the money to the market as they sell power, so that the flow can continue.”

According to Ogaji, the market operator prepares the invoices; send them to the Gencos; Gencos verify the invoices, and send them back to the market operator, who now prepares what we call settlement statement.

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She said, “The settlement statement is sent to NBET, which then makes payment to the Gencos. The payment NBET makes is only what the Discos are able to pay. If Discos pay 20 per cent; that is what NBET sends. So, where is the buffer NBET is there to provide? If it is not able to provide the buffer, then the market is losing a whopping 2.5 per cent [of tariff revenues], which is being paid to NBET whether it does anything or not.

“If the government, in its wisdom, thinks that NBET should still be there, then it should be restructured and let’s know what functions it is there to perform, otherwise NBET should be scrapped and the staff be shared into the different agencies, NERC and market operator.”

Source: Punch

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