Power Generation Companies (GenCos) are urging the Federal Government to address the N2 trillion electricity debt, emphasizing that 90% of their monthly invoices remain unpaid.
They warned that this issue is endangering the continued operation of their power generation plants and called for “immediate action to prevent national security challenges that may result from the failure of the GenCos to sustain steady generation of electricity for Nigerians.”
According to a statement signed by its Board Chairman, Colonel Sani Bello (retd.), on Sunday, the GenCos are currently owed over N2 trillion for the power they generated, put into the national grid, and consumed by end users.
This is in addition to the over N1.7 trillion funding gap created in the recent supplementary MYTO order 2024, which lacks a designated fund to fill the gap.
The statement read, “Even though the supplementary MYTO order leaves about 90% of GenCos’ monthly invoices unmet without a bankable securitization or financing plan, the power generated by GenCos continues to be consumed in full without corresponding full payment.
The GenCos therefore call on the Federal Government and key stakeholders to urgently address the issue of inadequate payment for electricity generated and consumed on the national grid. The liquidity challenge threatens the continued operation of their power generation plants and must be addressed urgently and sustainably.”
The group highlighted that GenCos are operating under harsh monetary and fiscal conditions, exacerbated by current economic realities.
“The flow of money within the power industry is one of the fundamental problems preventing Nigerians from enjoying sustainable improvements in electricity supply.
Solving these issues expeditiously would enable GenCos to meet their critical needs, ensuring sustainable power generation and better access to reliable electricity supply for Nigerians.”
The statement further emphasized that, despite the commencement of the Partial Activation of Contracts in the NESI on July 1, 2022, and various measures like the minimum remittance order and bilateral market declaration, the power generated by GenCos continues to be consumed without corresponding full payment.
Factors such as inflation, forex volatility, and the supplementary MYTO order contribute to the liquidity challenges, leaving about 90% of GenCos’ monthly invoices unmet without a bankable securitization or financing plan.
GenCos reaffirmed that they are owed over N2 trillion for the power generated and consumed.
The huge debt is inhibiting their ability to meet obligations to lenders, operate and maintain operations, procure necessary spare parts, and fulfill employee-related obligations.
They also noted that their expectations of being settled through external support, such as the World Bank PSRO, have been dampened due to other market participants’ inability to meet their respective distribution-linked indicators (DLIs) under the Power Sector Recovery Program (PSRP).
Access to forex remains a critical issue, given that major operation and maintenance needs are dollarized, underscoring the importance of a specialized window or stable dollar allocation for GenCos.
The statement concluded by stressing the need for a coordinated approach by all stakeholders in the NESI to realistically and sustainably address the liquidity issue in the power sector.
The GenCos are requesting immediate and expedited action to prevent national security challenges resulting from their inability to sustain steady electricity generation for Nigerians.
They highlighted that GenCos’ liquidity challenges are further worsened by policies such as the payment waterfall in the NESI, which deprioritizes payment to GenCos.
