The Federal Government is to pay electricity generation companies and gas firms about N272.59 billion for 2020 and part of 2019, document sighted by Daily Sun from the Ministry of Finance has revealed.
The figures, according to the Federal Ministry of Finance, Budget and National Planning with the title ‘Power Sector Recovery Plan and Impact of COVID-19 Pandemic, indicated that Gencos and gas firms are expected to be paid 100 per cent of their invoices.
Gencos and gas firms have, since the privatization of the power sector seven years ago, been in a running battle with the Nigerian Bulk Electricity Trading Company (NBET) over unsettled debts for power generated and gas supplied.
Given a further breakdown of the payment structure under the N600 billion Payment Assurance Facility (PAF) managed by the Central Bank of Nigeria (CBN), the document indicated that about N164.88 billion has been set aside by the Federal Government for Gencos and gas firms from January to December 2020 and another N107.71 billion from October to December 2019 but were yet to be disbursed.
However, the document disclosed that about N270.71 billion was disbursed from January to September 2019.
On March 1, 2017, the President approved a N701 billion PAF to augment the market proceeds NBET earns to enable the organization to make a ‘minimum’ payment to generation plants-80 per cent and gas suppliers-90 per cent.
PAF is a facility line at the CBN, guaranteed by the Federal Ministry of Finance. In settling Gencos and gas suppliers invoices, CBN does not credit NBETs’ TSA account; instead, following NBETs settlement process, it sends all documentation to the CBN, for the bank to ratify and credit the generation and gas companies.
Recall that the Nigerian Gas Association (NGA) had last week during a webinar seminar raised the alarm over the mounting debt of the power sector and its attendant effects on its members.
The NGA President, Mrs.Audrey Joe-Ezigbo, lamented that some of its members supplying gas to power plants were yet to be settled for invoices submitted in September 2019, which she said runs into several trillions.
‘‘I do not have the exact numbers as at today but what I can tell you is that from our members who are gas suppliers, I am talking about several trillions with many of the invoices not settled for quite a while. None has been settled this year while we have some that have not been paid as far back as last September.
‘‘How can you survive running a business without being paid for services delivered over 10 months ago? Some of our members are just doing this as a national sacrifice which she said is no longer sustainable in view of current realities occasioned by the coronavirus pandemic.’’
The NGA President equally decried the payment mode, which, she said are sometimes settled in trickles of about 30 percent of invoice value, leaving the outstanding to spill over till a later date, saying this does not connote a sustainable measure.
According to her, some of these actions on the part of the power sector have led to the declaration of force majeure by gas suppliers.
‘‘The NGA’s position for some of our members who into the gas supply side is actually that of commendation because it is very hard to continue to supply gas into a market where you are not been paid. This is really a nationalistic approach that they have adopted to continue to deliver gas to the power sector even in the face of what is clearly an illiquid value chain.’’
She said she believes that there is still a need to look at the structure, adding that discussions are ongoing to ensure that there is securitization for players in the power sector value chain, stressing that one of the things NGA is exploring is a higher level of handshake between the Ministries of Petroleum Resources and Power.