GenCos’ threat highlights further reasons for Nigeria power sector reform

The current disagreement between the Nigerian Bulk Electricity Trading Company (NBET) and the Electricity Generating Companies (GENCOs) over the administrative charge of payment of gas is yet another reflection of the lopsided privatisation of the power sector. And it may be another reason why that sector needs to be urgently reformed to save Nigerians from excruciating darkness and to also reignite the economy.

While the disagreement may appear to be routine, GENCOs are threatening to shut down generating plants nationwide, and thus cause a general blackout following what it called “alleged blackmail and bullish stance of the Nigerian Bulk Electricity Trading (NBET) Company in dealing with its members”. If the threat is carried out, it can only further compound the country’s electricity woes.

Therefore, the Federal Government should seek ways to end the feud and avert the possible shutdown of power generating plants across the country. But in the long run, this may be an opportunity for the government to drastically review the current arrangement with a view to replacing it with a more effective and efficient system of providing uninterrupted power supply to Nigerians and the surviving industries.

Last week, the Executive Secretary of Association of Power Generation Companies, Dr Joy Ogaji, disclosed that GENCOs would shut down generating plants and cause nationwide blackout over 0.75 per cent charge NBET has demanded as an administrative charge from GENCOs for payment of gas invoices on their behalf. She accused NBET of failure to honour the earlier agreement it had with GENCOs and attributed current liquidity challenge of GENCOs to NBET’s breach of the Power Purchase Agreement (PPA) terms of 100 per cent payment for power generated and supplied.

This disagreement between NBET and GENCOs is a clear indication that all is not well with stakeholders in the power sector and this may be largely responsible for why millions of Nigerians are yet to have unhindered access to electricity supply either for domestic or industrial purpose. It is scandalous that despite the humongous funds reportedly injected by successive administrations to overhaul the decaying and corruption-ridden power sector, consumers are forced to pay for darkness rather than light due to failure of GENCOs and DISCOs to provide satisfactory service delivery.

According to Ogaji, the Nigerian Electricity Regulatory Commission that is expected to play its role as regulator, as well as other relevant authorities, have failed to act despite the fact that the matter had been reported to them. Since the Power Purchase Agreement clearly stipulates terms of business relationship and expectations of the parties, everyone ought to have complied with terms of the agreement in order to avoid this potentially unpleasant situation.

Ideally, NBET should act as a stabiliser between GENCOs and DISCOs whenever there is a problem in the Transitional Electricity Market and not to compound it. But if it is true that it failed to honour the agreement with GENCOs, that would compound a bad situation.
Nigeria, in terms of gas reserves globally, occupies the ninth position, but, unfortunately, a great part of the reserves goes into gas flaring. The government needs to muster the political will to stop gas flaring in order to maximise the country’s vast gas resources and ensure adequate supply of gas to power plants to aid uninterrupted power supply.

 

Source: Independent

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