power sector

Responding to a recent call by the President of the Senate of Nigeria, Ahmed Lawan, for the reversal of the 2013 power sector privatisation, the power generation companies (GenCos) have argued that they have fulfilled all aspects of obligations as stated in the stipulated terms and guidelines at inception in November 2013.

The Daily Trust reported that GenCo operators recalled that they have made substantial investments and taken business risks in the power sector since the privatisation of the sector.

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Specifically, the Executive Director of the Association of Power Generation Companies (APGC), Dr Joy Ogaji, indicated in a statement on Monday that the GenCos had continually operated at their maximum available capacities despite national grid constraints.

Ogaji also noted that other challenges GenCos are facing include huge debts by the federal government and failure of government agencies and other operators in the value chain to honour their commitments.

As at the takeover of the assets on 1 November 2013, the GenCos and government signed a Power Purchase Agreement (PPA), Gas Supply Agreement (GSA), Gas Transportation Agreement (GTA) and the Grid connection agreement.

The federal government also promised to provide securitisation (guarantee on PPA) for bank lending, and set a minimum performance target for the GenCos.

“However, till date, the guidelines have still not been activated.” APGC said the inactivation resulted in unpaid sums for power supplied to the grid as the GenCos expect payment of over N600 billion ($2 billion) outstanding debt to them since the inception of privatisation.

The lack of payment guarantee has also caused defaults in invoice payment from other parties in the electricity market, it added

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APGC also said its members had 8,589MW available capacity out of 134,427MW installed capacity across over 23 power plants but the maximum power ever reached on the national grid was 5,375MW.

“If we had a grid capacity that matches our average available capacity, 3,214MW can be made available immediately to Nigerians at no additional cost”, the group added.

On the impact of its investments since the privatisation, the group stated: “GenCos have doubled their available capacities from 4,214MW at takeover in 2013 to 8,145MW in 2020. Out of the 8,145MW available capacity, only 3,987MW is generated for Nigerians as the balance 4,159MW is stranded as a result of constraints in the national grid capacity.”