NBET, GenCos Conflict Could Worsen Power Sector Woes

The decision by the Nigerian Bulk Electricity Trading Company (NBET) to impose administrative charge of 0.75 per cent on power generation companies (GenCos) has raised some dust in the sector. The issue, if not addressed on time, could aggravate the sector’s woes.

Like a recurrent decimal, the problems in the electricity industry keep resonating as stakeholders, including the Federal Government, seem incapable of proffering solutions to them.

For some time, the sector has been grappling with shortage of gas, poor generation, bad distribution networks, irregular supply of electricity, scarcity of meters, huge debts owed power distributors, among others, which have continued to stall its growth and that of the economy.

Specifically, GenCos on September 21, announced its decision to shut down their power plants, with a view to driving home their points. Besides, the firms threatened to explore other options to force NBET to rescind its decision on the charge.

To achieve this goal, GenCos, through their association, Association of Power Generation Companies(APGC), have written letters to the Office of the Vice President, Prof Yemi Osinbajo, Minister of Power Mr. Saleh Mammah and other relevant agencies on the issue without achieving its goal.

NBET was set up by the Federal Government to administer the electricity pool. Out of the the GenCos, six were unbundled from the defunct Power Holding Company of Nigeria (PHCN) in 2013. The firms are Geregu Power Plc, Afam Plc, Sapele Power Plc, Ughelli Power Plc, Kainji Hydro Electric and Shiroro Hydro Electric.

Speaking on the issue, APGC Executive Secretary Dr. Joy Ogaji said the firms were planning to shut down their plants if the Federal Government failed to resolve the issue between them and the Nigerian Electricity Bulk Trading (NBET) Plc. The firms, she said, will shut down operation because they are not happy with the new policy of NBET.

Prior to this, the three key operators in the sector have been recording dismal outputs. Not only this, they are struggling to promote efficiency as they are unable to provide the required capital for operation.

Industry observers argue that operators depend on each ther for survival, adding that the problems in one segment of the value chain affects the entire industry.

NBET position

The decision to impose administrative charge of 0.75 per cent on power generation firms may not be unconnected with the debts owed by the companies.

Industry sources, who spoke on condition of anonymity, said power firms owed gas suppliers a lot of money, adding that NBET transacts gas business on behalf of power generation firms. “NBET might be using 0.75 per cent administrative charge, which was imposed on electricity generation firms as a means of collecting debts from them,” the source said.

Usurping regulatory roles

The former Nigerian President, Association of International Energy Economist (AIEA), Prof. Wunmi Iledare, accused NBET of carrying out duties that are outside its purview. In an interview with The Nation on phone, he said NBET was assigned to administer electricity pool and not as a regulator.

Iledare said: “NBET is not a regulatory body and as a result cannot directly or indirectly regulate the nation’s electricity market. The Nigerian Electricity Regulatory Commission (NERC) is the only body, which the constitution allows to play that role.  The electricity market is not fully matured.

“Why are you imposing administrative charge on GenCos? When you put additional cost to a production, you are taking money away from that product. By so doing, you are not adding value to that product. According to him, NBET exists in order to remove anything that is assumed to be a problem in the sector not to create it, as it is currently being done through imposition of administrative charge.

Shortage of gas

The pioneer Managing Director, Nigerian Liquefied and Natural Gas (NLNG), Dr Godswlll Ihetu, urged the Federal Government to ensure that gas is made available to the power sector in order to improve generation in the country. According to him, the sector is not enjoying gas due to some problems such as infrastructure and others.

“Power plants are not accessing the product regularly due to infrastructural bottlenecks.  Pipeline vandalism is a problem, which the gas suppliers and users (power plants) are trying to cope with daily,” he added.

The sector, Ihetu said, has had enough of gas shortage and should not be allowed to suffer more. He said the issue of imposing 0.75 per cent administrative charge on the power generation companies (GenCos) is another way of adding to the problems in the sector and should be strongly opposed by the Federal Government if the sector will develop and further assist Nigeria to grow its economy.

Ihetu said: “The Federal Government, gas suppliers, owners of thermal plants and others that use the product for domestic growth should focus on how to enable access to gas adequately and not causing  impediments to the realisation of gas potentials in the country.”

He said  the Federal Government set up the Nigeria Liquefied Natural Gas (NLNG) 30 years ago for export purpose, adding that not for electricity generation. He said foreign oil companies and their local counterparts are in charge of providing gas to thermal operators not the NLNG.

According to him, the multinational oil companies and their local counterparts are trying their best in the area of providing gas for production of electricity, urging them to do more in order to solve the country’s electricity problem.

An analyst, Meka Olowola said the roles of the power generation companies (GenCos) in sustaining production in the country are not well appreciated. He said GenCos generate electricity that is more than what the power distribution companies can take, urging stakeholders to try and improve the firms’ growth and not what will slow down the growth.

Source: The Nation