Nigerian electricity generation companies (GenCos) have threatened to shut down power generation across the country if the federal government does not intervene and call the Nigerian Bulk Electricity Trading Company (NBET) to order.
The GenCos through the Executive Secretary of their umbrella group, the Association of Power Generation Companies (APGC), Joy Ogaji, said in Abuja on Sunday that the federal government must prevail on the NBET to rescind its insistence on its “unilateral and arbitral directive.”
Backstory
In September, NBET had directed all thermal GENCos to comply with its directive to submit their respective board approvals or resolutions affirming commitment to pay 0.75 per cent administrative charge on all collated and submitted gas and transportation cost invoices to the Central Bank of Nigeria (CBN) for payment.
NBET (Bulk Trader) is a public liability trading licensee established by the federal government as a creditworthy off-taker of generated electricity in support of private sector investment in the NESI.
The support, in the form of bearing the off-take market and default risks such as liquidity/payment risks, was the incentive GENCOs required to invest in the transition electricity market.
Grouse
Mrs Ogaji told reporters the main reason the GENCOs are considering shutting down their plants was due to the inability of NBET to honour the agreement it had with them.
She said the GenCos were facing serious liquidity challenges due to NBET’s breach of the Power Purchase Agreement (PPA) terms of 100 per cent payment for power generated and supplied.
NBET is licensed and regulated by the Nigerian Electricity Regulatory Commission (NERC) to undertake bulk purchase and resale of electricity in the Transitional Electricity Market.
The APGC Executive Secretary accused NBET’s management of constituting itself as “the Alpha and Omega” authority “that has the capacity to make or mar generation businesses in the country”.
She said the situation is so bad “that to remain in business and provide power to Nigerians, GenCos are expected to plead, lobby, and beg to be paid for power generated and utilised.”
“NBET has now reduced its role to blackmailing and threatening GenCos investors and chairmen who have refused to concede to NBET’s illegal demand of a 0.75 per cent charge on invoices paid to gas suppliers.”
She said having rejected the 0.75% charge demanded from the GenCos as an administrative charge for payment of gas invoices, it was expected that the issue was rested.
“It is sad that NBET has now reduced its role to blackmailing/threatening GenCo investors/Chairmen who have refused to concede to NBET’s illegal demand of a 0.75% charge on invoices paid to gas suppliers.
“NBET has clearly threatened not to release payments due GenCos until they accede to NBET’s request, urging them to agree for a quid pro quo with the 0.75 per cent administrative charge.
“The situation is truly grave and completely unprecedented as NBET has completely shed its role as a licensee of the industry and has taken on some sort of regulatory role. The entity is almost conducting itself in a manner that suggests that it is above the law.
“This singular action by NBET may lead to the shutdown of power supply by GenCos, who have unanimously agreed to call the bluff of NBET,” Mrs Ogaji said.
The official said the matter had been reported to the Nigerian Electricity Regulatory Commission (NERC) “and other high authorities”, including the vice Chairman of its board, the Bureau of Public Enterprises (BPE) as well as the Gas Aggregation Company of Nigeria (GACN).
She called on the federal government through the board Chairman of NBET to review the professional conduct of the management of NBET and ensure that business etiquettes were instilled.
“In a nascent electricity market like ours”, she said “there were processes entrenched in the Market Rules and other applicable Codes that should be followed in dealing with sectorial issues at all times.”
“The market rules”, she said, “do not leave room for arbitrariness, duress or undue influence.”
She said the PPA clearly delineates the terms of the business relationship and expectations of the parties.
“NBET was designed to help smoothen these relationships, removing frictions which may exist between GENCOs and DISCOs.
“NBET was envisaged to occupy the space between GENCOs and DISCOs, acting as a “shock absorber” in times of market turbulence and not to make it worse,”she said.
Mrs Ogaji said the GENCOs indebtedness to their gas suppliers was due to NBET’s indebtedness to them.
She said the collective outstanding indebtedness of the GENCOs for gas payment “was not as much the over N1 trillion the NBET is owing to the GENCOs”.
The APGC secretary said if the N600 billion the federal government announced was available to pay the GENCOs was not released on time, they would be compelled to shut down their power generation in the country.
Several calls to the managing director/chief executive officer of NBET, Marilyn Amobi, were not answered.
Also the text message sent to her seeking NBET’s side of the controversy was not responded to on Sunday
In September, when similar contacts were made, Mrs Amobi told PREMIUM TIMES not to contact her over the issue as she was not obliged to respond to issues raised by the APGC.
She said the NBET has no contractual obligation with the individual GENCOs and their association.
PREMIUM TIMES
