Darkness Looms as N710bn Power Supply Fund Draws Down
Chineme Okafor and Amaka Mozie in Abuja
Electricity generation companies (Gencos) in Nigeria’s power sector yesterday warned that the prevailing nationwide power supply situation may decline significantly from December as the N701.9 billion payment assurance scheme initiated by the federal government through the Central Bank of Nigeria (CBN) and the Nigerian Bulk Electricity Trading Plc (NBET), is drawn down.
The fund will be drawn down before 2019 that it is originally designed to last.
The fund was put in place to guarantee prompt payments for power supplied to the grid.
Already, the Gencos stated that gas suppliers had begun to issue them notice of disconnection, adding that the Alaoji Independent Power Plant owned by the Niger Delta Power Holding Company (NDPHC) has been disconnected from gas supply by Total while First Independent Power Limited in Rivers State has equally been issued notice of disconnection.
But their claims, which were made at the 2018 edition of the Power Safety Summit (PSS) in Abuja, have been debunked by the NBET, which said there was no cause for alarm, and that it was working hard to ensure payments to Gencos for power supplied to the national grid were made promptly.
The Gencos’ warning and NBET’s assurance also coincided with the disclosure at the summit by the Nigerian Electricity Management Services Agency (NEMSA) that a total of 453 people had died of electricity related accidents in the country’s power sector within the last 46 months.
The N701 billion was obtained as a loan from the CBN by the NBET to enable it meet up with payments to Gencos for power supplied to the grid considering that monthly remittances of the 11 electricity distribution companies (Discos) to it for power sold to them have remained inadequate to pay the Gencos.
Speaking on the sidelines of the PSS shortly after making a presentation, the Executive Secretary of the Association of Power Generation Companies (APGC) which is the umbrella trade association of the Gencos, Dr. Joy Ogaji, stated that the Gencos were worried the stop-gap fund was fast depleting and would not last more than December 2018.
Ogaji, also noted that the Gencos had tried without success to meet with representatives of the federal government in this regards. She added that when the N701 billion finishes, it would be difficult for the Gencos to continue generating power to the grid.
“For the Gencos, we have a contractual obligation with the government and we don’t have a direct contract with the Discos, so, government owes us through the NBET to pay us.
“We are really worried and have called for meetings with the government but as it looks, government is not able to find other solutions because the plan for the N701 billion was such that by this time of the year – December, the Discos’ collections and remittance would have increased to 80 per cent, and at that point, the government would with the PSRP (Power Sector Recovery Programme) and the loan from the World Bank see to this,” said Ogaji.
Asked why the Gencos were worried since the PSRP was there to take care of incoming financial liabilities, Ogaji stated: “The body language shows that the PSRP is in the freezer and they are not in a hurry to de-freeze it. When you ask stakeholders, they tell you the PSRP is alive but even the World Bank isn’t sure about the status of the PSRP.”
Continuing, she said: “This is not about Gencos saying they will shutdown. The factors of production will just outplay. Right now, Total has shut off (gas supply to) the Alaoji NIPP because they have not been paid since May, and I mentioned this earlier. First Independent Power Limited (FIPL) has gotten a warning letter from Shell and two other companies have also been given warning letters.
“If there is no gas, and you know about 89 per cent of our power comes from gas, we don’t need to say it, automatically, if there is no gas, we cannot generate.”
However, in a note exchanged with THISDAY on the development, the head of corporate communications at the NBET, Henrietta Ighomrore, stated that the fund was still in operations and not going to deplete so soon.
Ighomrore, equally explained that the NBET was working with the government to ensure that payments due to the Gencos were met, and power generation uninterrupted.
According to her, “The 701.9 billion is still operational, NBET is committed to making payments to the Gencos. We will continue to pursue and meet our obligations to the Gencos.
“The idea of the 701.9 billion did not come from the Gencos, it was the in-house team of NBET that came up with the facility, and with the support of the Honourable Minister of Power, we approached the government and the Federal Executive Council gave the approval.”
“NBET continues to make payments and explore creative ways to ensure improvment in payments to Gencos. There is no cause for alarm. The sector is moving forward and to the next level,” she added.
Meanwhile, the NEMSA has said that at least 453 persons were electrocuted in 46 months since 2015.
NEMSA’s Managing Director, Mr. Peter Ewesor, who disclosed this at the PSS, charged operators in the power sector to work hard to attain a zero target for accidents and electrocutions in the sector.
He gave the electrical accidents breakdown to include 113 deaths occurring from 110 accidents in 2015; 140 deaths from 124 accidents in 2016; 95 accidents caused 113 electrocution in 2017, and From 87 deaths from 82 accidents between January and October 2018.
Ewesor said in this regards: “Operators present should note that what we are working at is zero electrical accidents and most especially electrocution.”
He added that electricity accidents do not just happen, and traced their causes to usage use of power by the public which in this regards accounts for 55 per cent of the causes.
Other causes he noted include encroaching on right of ways, poor adherence to safety rules by the operators and aging networks.
Ewesor charged electricity distribution companies (Discos) in the sector to improve on their safety practices, especially replacing aging installations in their networks.
“This your aging network, if you don’t start changing and maintaining them, as we go on, we will not have power to supply to Nigerians,” said Ewesor.
Similarly, the Minister of Power, Works and Housing, Mr. Babatunde Fashola, who was represented by the Director for Distribution in the ministry, Mrs. Briskila Sapke, urged power sector operators to comply with the Nigerian Electricity Regulatory Commission (NERC) rules on right of ways and safety operations to reduce the accident figures.
Fashola said, “We have made concerted efforts in recent times to stakeholders to intervene on encroachment of right of way of power lines which hinders maintenance.”