New Gas Charge : Blackout Looms As 24 GenCos Threaten Poll-out
Power cut is imminent across the country as 24 thermal power Generation Companies (GenCos) are mulling a force majeure action to quit business over a 0.75 percent ‘unregulated’ administrative charge for gas supply transactions being introduced by the Nigerian Bulk Electricity Trading Plc (NBET).
The new charge is said to be a condition precedent for the GenCos to draw from the recently approved N600 billion federal government’s intervention fund to cushion the liquidity crisis in the power sector. If this action is taken, Daily Trust reports that it could cut available power generation capacity to 5,266 megawatts (MW).
The Independent System Operation (ISO) data of September 6, 2019 shows 6,691MW available capacity at 27 GenCos. The thermal GenCos have 5,266MW of this while three hydropower plants – Kainji, Jebba and Shiroro – have 1,425MW capacity. Briefing pressmen at the weekend, the Executive Secretary of the Association of Power Generation Companies (APGC), Dr. Joy Ogaji, said the Managing Director of NBET, Marilyn Amobi, had met with the GenCos earlier to inform them of the development but that the operators requested for a letter to that effect.
APGC said given the poor remittances in the electricity market where GenCos get only 15% of their monthly energy invoices and with the ‘unregulated’ charge NBET is introducing, the power firms may quit operation.
“The time may just be right for GenCos to declare force majeure and release themselves of all market obligations. Surely, GenCos will remain blameless for taking such actions,” Ogaji said. It was learnt that NBET had accused the GenCos of not meeting the full obligation for their gas payment in the past.
But APGC in a response said, while NBET has been collecting its service charge through the Market Operator (MO) in full since May 2019, same NBET had only remitted about 30% of the GenCos monthly invoice to the DisCos for energy generated. Pursuing the new charge, NBET on September 13, 2019 issued the letter to the thermal (gas-fired) GenCos, directing them to quickly get their boards’ approvals for NBET to take over the payment of gas and transportation from gas suppliers for an administrative charge of 0.75 percent.
“The letter gave each GenCo a three working day ultimatum to respond with the board resolution (deadline of September 18, 2019) or face non-payment of energy invoices,” Dr. Ogaji said. NBET, in the letter, made it compulsory before the affected GenCos can have access to the N600 billion CBN fund meant to drive improved power generation. The GenCos said NERC remained the umpire of the power sector empowered to issue such directive after proper consultations with stakeholders.
“The thermal GenCos have written to NERC about this. We hope that NERC will respond soon. The fact that NBET is placing the extortionist 0.75% “administrative charge” on GenCos who are already convulsing, in the Nigerian Electricity Supply Industry (NESI), is an aberration on the duty of care placed on NBET.” With the 0.75 percent administrative charge on the N600bn intervention fund, APGC said NBET will make N2.7bn for doing nothing as it is the GenCos that have a gas supply agreement with gas suppliers.
Economic Confidential reports that NBET gets 2.5 percent of all monthly energy payment made in the electricity market. When contacted, the Managing Director of NBET, Marilyn Amobi, would not comment saying a formal request for enquiry must be made to the agency to get clarification on why NBET wanted to take over the gas supply transactions from the GenCos with a 0.75% administration charge on it.
