Isaac Anumihe, Abuja
Generation Companies of Nigeria (GenCos) may soon head for the courts to recover over N1 trillion for stranded power debt owed them by the Federal Government.
Executive Secretary of Association of Power Generation (APGC), Dr Joy Ogaji, told Daily Sun that the GenCos would explore all the options available for them to recover their money in accordance with the law.
“The GenCos intend to explore whatever options there are in line with the provisions in the agreements they signed” she said, adding that the debt burden has crippled their businesses and threatened their existence.
“GenCos are now faced with a lack of funds to improve infrastructure due to this challenge. Oftentimes, we are forced to generate below their capacity, which in turn leads to minimal power generation. They have also started having difficulties servicing their loans and offsetting gas costs. Most of these loans are obtained from commercial banks and now appear on bank balance sheets as non-performing loans (NPLs). This threatens the very existence of GenCos, as no business can survive without converting debt into cash.
Other GenCos under concession may also be unable to pay their concession fees and royalty payments. Milestones set by regulators such as capacity factor and expansion may not be attained as a result of the debt being owed them, and this could expose GenCos to sanctions. The strained liquidity situation has stunted the GenCos cash flow; while the capital required for medium to long-term investment is grossly inadequate” she lamented.
In 2018 alone a total of 3,520.12 megawatts of stranded electricity running into billions of naira was generated by the GenCos. But the Nigerian Electricity Bulk Trader (NBET), a government agency whose responsibility is to defray the cost of generation has always complained of lack of funds to meet its obligation.
This debt has continued to pile from 2013 till date without any relief from anywhere.
Several attempts to speak to the spokeswoman of NBET failed.