Some 13 power generation companies (GENCOs), have warned that they may be forced to shut down operations if the Federal Government did not rescind the preferential treatment it is meting out to some operators at the expense of others.
The government is alleged to have provided sovereign guarantees for World Bank Partial Risk Guarantee, for Azura Power, and Accugas Limited, a subsidiary of Seven Energy, to enable them receive payment for supply 100 per cent.
Ahead of the possible shut down, the GENCOs have already instituted legal actions against the government, which they claimed owed about N1.213 trillion, or more than 10 per cent of Nigeria’s proposed national budget for electricity supplied from 2013 till date.
Twelve of these GENCOs, which include the biggest players in the industry have combined installed capacity of 9,048.15 megawatts (MW), which if shut down, will throw the economy into crisis, especially as even with the combined output, Nigeria is only able to generate about 4,046.34MW, as at Thursday evening.
However, Azura Power located in Edo State, has installed capacity of 1,500 megawatts (MW), while Accugas supplies gas to the Calabar independent power plant (561MW) in Cross River State, making a combined capacity of 2,061MW, barely enough to sustain the country if the 13 GENCOs downed tools.
“The GENCOs have instituted a legal action against the Federal Government of Nigeria for deliberately meting out discriminatory treatment to GENCOs, and their gas suppliers with intent to harm the business interests of the GENCOs, and conferring preferential treatment on Azura Power West Africa Limited, and Accugas Limited, to the detriment of the Nigerian Electricity Supply Industry and the Power Sector,” the 13 said in a statement.
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They insisted that this is to “the detriment of the Nigerian Electricity Supply Industry and the Power Sector as a whole,” and adding, “The GENCOs relied on the payment assurance representations made by the Federal Government to alter their positions to their detriment by entering into contractual obligations to ensure recovery of additional plants capacities and effective operation of the plants.”
For decades, successive governments had struggled to boost generation capacity, which have sunk over $16billions since the democratic dispensation, but without significant change in the supply of electricity for commercial and domestic use, such that Nigeria is the biggest market for generating sets in the world.
The companies suing the government are, Mainstream Energy Solutions Limited; Transcorp Power Limited; Egbin Power Plc; Northsouth Power Company Ltd.; First Independent Power Limited; Shell Petroleum Development Co. Ltd; Geregu Power Plc; Sapele Power Plc; Pacific Energy Limited; Afam Power Plc; Ibom Power Company Limited; Omotosho Power Plc; and Niger Delta Power Holding Company.
They therefore demanded for confirmation of a plan for 100% payment of all outstanding indebtedness and interests due to the GENCOs for electricity supplied and ancillary services provided by them, 100% payment (not 80% payment) of all invoices to be submitted by GENCOs under the payment assurance programme; and payment of all sums due as capacity charge to the GENCOs from 2013 till date.
They also insisted on the non-admission of any additional beneficiary into the ₦701billion assurance facility without corresponding increase in the facility amount, and payment of the balance of ₦213billion from CBN Electricity Market Stabilisation Fund.
Also demanded is the removal of all administrative bottlenecks delaying drawdown of payment assurance funds; and provision of Sovereign Guarantee and/or partial risk guarantee for all payment obligations to GENCOs.
Source: G Business
