Gencos outstanding unpaid invoices now exceed N6tr, says APGC

Association of Power Generation Companies (APGC), at the weekend revealed that unpaid invoices to its members now stands at over N6 trillion. The disclosure comes on the heels of a statement allegedly credited to the President of the Nigerian Labour Congress (NLC), Joe Ajaero, labeling power generation companies of engaging in “institutionalised extortion.”

APGC has since described the statement as unfortunate. The body described the claims as misleading and damaging to efforts aimed at stabilising the country’s fragile power sector.

 “GenCos face the greatest risk in the electricity value chain, with outstanding unpaid invoices now exceeding N6 trillion. Rather than castigate operators, attention should be focused on addressing the liquidity crisis that threatens the sustainability of electricity supply,” the Chief Executive Officer of APGC, Dr. Joy Ogaji, explained.

Dr. Ogaji, while faulting Ajaero, insisted that his position does not reflect the realities of the Nigerian Electricity Supply Industry (NESI).

 “While we acknowledge the frustrations of Nigerians regarding unstable electricity supply, we must firmly reject the characterisation of the sector’s challenges as robbery and a grand deception. Such allegations are a misrepresentation of the facts and a disservice to ongoing efforts to stabilise the power sector,” Dr. Ogaji said.

According to Ogaji, GenCos have available capacity to ensure stable and reliable electricity supply to Nigerians, if only the same can be effectively transmitted and distributed. Besides, she maintained that the focus should be more on making electricity available to Nigerians in a sustainable manner and at all times.

Taking a cursory look at the Gencos performance since 2013, Ogaji noted that her members have doubled their available capacities from 3427MW at takeover in 2013 to 8,145MW in 2020. She argued that out of the 8,145MW available capacity, only 3,987MW was  generated for Nigerians as the balance 4,159MW was stranded as a result of constraints in the national grid capacity. 

Besides, she noted that GenCos in addition to acquiring the assets for over $1 billion, have invested heavily in ramping up nameplate capacity through frequent maintenance, minor and major inspections, as well as major overhauls, spending over $3billion to ramp up capacity since November 1, 2013.

 “As key operators in the power value chain and the producers of the electricity- the product in issue, GenCos understand very well the entire process of electricity generation, the raw material and feedstock implications, various significant costs involved, the excruciating financial burden we are already carrying due to huge outstanding debts owed us by the market; the suffocating loan repayment obligations we owe to banks and other lenders,  the continuous forex (FX) losses we have continued to bear for years, etc. This should form a sincere and objective analysis of these issues vis-à-vis the current situation of GenCos in the NESI.  

As Nigerians, the GenCos believe that they (NLC) owe it to themselves not to play to the gallery on an important issue like this, but to put the facts on the table for all stakeholders to appreciate, and by so doing, engender a robust engagement that should truly lead us to realistic and sustainable solutions to issues in the power,” Dr. Ogaji said.

According to the association, power generation companies remain the most financially exposed segment of the electricity value chain because they generate electricity that is not fully paid for due to revenue shortfalls across the market.

The association also rejected claims that proposed government financial support for the sector amounted to a political arrangement, insisting that intervention funds were necessary to prevent further deterioration.

 “We strongly refute the insinuation that proposed government support for the sector is a clandestine plan to ‘settle the boys.’ Such claims are baseless and undermine the critical liquidity interventions required to keep the lights on,” she said, challenging the NLC or any other institution to investigate Gencos books which are open to investigation, including independent forensic examination if required.

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 “If the NLC or any other institution considers it necessary, our books are available for any form of investigation. What is important is to identify the real causes of the sector’s challenges and work collaboratively toward sustainable solutions,” Ogaji said.

Highlighting investments by GenCos, Ogaji referenced the Mainstream Energy Solutions Limited’s (MESL) effort which has turned around Kainji Hydropower plant. She noted that at the time of take over of the plant by MESL, not a single unit was working, as the the plant was importing power to run its auxiliaries. But today, she revealed that six units are running in Kainji, while in Jebba three of the six units are now in operation.  MESL has spent over $300 million on the plants.

 “In any electricity market, a generation company should only bother itself with making its machines available; the offtaker deals with other issues such as guarantees. However, in Nigeria, we beg for gas to generate power, then we borrow money to fix our machines, then we generate electricity after we have declared the capacity to the SO, then on the day of generation for no fault of ours we are told to go down because system cannot take it. Payment is only what they took. Not minding the impact of generating below our base load. Then we now start calling everyone to help us get paid. This is the circle,” a visibly angry Dr. Ogaji said.

She insisted that GenCos have always advocated, supported and played their own part towards providing stable and reliable electricity to Nigerians not just in this period but throughout the lifetime of Nigerians.

“The GenCos as responsible corporate citizens, wish to reiterate our commitment to a vibrant and efficient Nigeria Electricity Supply Industry (NESI) and our willingness to continue to be part of creating workable and sustainable solutions to the challenges of the power sector.

 “There is a need for a coordinated approach by all stakeholders in the NESI to realistically and sustainably address issues of the power sector so that Nigerians can have access to reliable electricity supply,” Dr. Ogaji concluded.