Isaac Anumihe, Abuja
Generation Companies in Nigeria (GenCos) on September 21, 2019, raised the alarm over the crippling weight of a new 0.75 per cent administrative charge slammed on them by the Nigerian Bulk Electricity Trading (NBET) – a Federal Government agency.
To this effect, they threatened to declare a force majeure if NBET goes ahead to implement the charge.
They equally wrote to the Nigerian Electricity Regulatory Commission (NERC) to express their grievances describing the charge as ‘illegal” and “extortionist”.
According to the Executive Secretary of Association of Power Generation Companies (APGC) and spokesperson for the GenCos, Dr Joy Ogaji, apart from shutting down their operations, GenCos would explore further options towards addressing their needs.
“NBET, on September 13, 2019 issued a letter to individual thermal GenCos directing them to obtain, as a matter of urgency, their respective board approvals or resolutions, bequeathing responsibility for payment of gas and transportation to the respective supply companies for an administrative charge of 0.75 per cent.
The letter gave each GenCo three working days ultimatum to respond with the board resolution i.e. September 18, 2019 or face non-payment of energy invoices.
It should be noted that NBET like other market participants, is a licensee of NERC and as such is expected to understand that in a regulated market, every expense/cost must be backed by a regulatory approval for effective computation of the market tariffs
The generation companies are not aware that such approvals have been issued by NERC nor is there any policy directive to this effect” she said, adding, however, that the GenCos have complained to NERC in writing and that if all efforts to make the Federal Government suspend the charge fails, they have no other option than to suspend operations in Nigeria.
However, every indication points to the fact that the Federal Government is tired and sick of the services of the GenCos and DisCos, a reason that prompted it to engage the services of Siemens AG (a German firm) to generate 25,000 megawatts on or before 2025.
Besides, the Federal Government is exploring other sources of energy such as the renewable energy to supply electricity.
Not bothered by any threat, the Federal Government is also making other contacts with the electricity-generating firms all over the world to reform the power sector by December this year when the contract with the DisCos and GenCos would have expired.
No doubt, it is because of this expected reform that the power sector was given a full ministry to execute the reform.
Already, it is talking with the United Arab Emirates (UAE) to establish a 300MW renewable energy power plant to generate power in Lagos as soon as possible.
Speaking when the United Arab Emirate Ambassador to Nigeria, Dr. Fahad Obaid Al Taffaq, paid him a courtesy visit, Minister of Power, Engineer Sale Mamman, stated the Federal Government’s openness to genuine investors especially in the power sector.
Mamman assured that the Ministry will collaborate with the United Arab Emirates in its areas of investments in Nigeria.
Consequently, the Ambassador informed the Minister that a 300 megawatt power plant established by the United Arab Emirate, (UAE) would soon take off in Lagos to supplement the National grid.
Al Taffaq said the 300MW power plant established by a member of the Emirates Royal Family, Ahmed Al-maktum has the capacity for expansion within a few months to about 1,000mw.
He noted that the power project is part of the United Arab Emirates investment activities in Nigeria.
The Ambassador however requested the assistance of the minister to secure a generation licence.
Meanwhile, UAE is expected, not only to generated electricity, it is also billed to invest in electricity transmission and distribution network across Nigeria.
The other step taken by the government to ensure constant electricity supply is to ensure that the reforms are institutionalized by law.
This was made known by the Speaker of House of Representatives, Honourable Femi Gbajabiamila during the recently-concluded National Economic Summit Group (NESG) in Abuja.
He expressed displeasure in the manner with which the GenCos and DisCos are carrying on their activities, saying that the legislature must ensure that these excesses stop.
Meanwhile, this imbroglio has generated a lot of reactions from different quarters including economy experts, human rights activists and power consumers.
An economic expert and the Lead Director of a Nigerian Knowledge Institution, Centre for Social Justice (CSJ), Mr.Eze Onyekpere, supported the decision of the Gencos to shut down operations.
According to him, the shutdown would make everybody to come to the roundtable and think of a way forward.
He said that the nation was tired of the crisis in the industry. Eze observed that the privatisation of the sector is not working and there is need for a review.
“The threat that they are shutting down is another dimension to the crisis in the sector.
The fact is that the privatisation is not working. I expected the government to call the public and give a solution if the GenCos don’t have any idea on how to move the sector.
The DisCos don’t have any capacity and they cannot invest.
So, if the GenCos want to shut down let them shut down. Why do I say so? It is better to shut down so that everybody will come to the roundtable.
Let the DisCos, the GenCos come together and let us now talk because what we are doing so far is the gathering of a bunch of people without character and confidence.
So, I will encourage them to shut down.
Whatever happens we will suffer it for a while and that will lead us to resolve the issue once and for all.
Former National Commissioner of the Nigerian National Human Rights Commission and now head of Human Rights Writers Association of Nigeria (HURIWA), Mr. Emmanuel Onwubiko, called on the Federal Government to suspend the charge.
He demanded a full disclosure of all the expenses in the power sector, threaetning that, should that not be done, human rights activists will go to court to demand same.
“The Federal Government must suspend further review in the taxation or tariffs against GenCos because the costs will inevitably be transferred to the consumers.
“The Federal government needs to be made to account for the huge investments of over $5 billion in the power sector since 2015 when in fact electricity power supplies to homes have never been this bad in over 50 years. Civil society groups must demand full disclosures and possibly go to court to compel the government to open up the books so the citizens know what exactly and which of the GenCos or DisCos collected public fund and definitely misapplied these monies because it was not long ago when a respected technocrat told us that over 90 million Nigerians are without power. It is also true that 75 per cent of Nigeria’s rural communities are yet to enjoy power supply even as there have been dozens of collapses of national grid in the past six months,” he said.
Also speaking, Development Economist, Mr Odilim Enwegbara, said the government should allow the private sector to be independent. He agreed that the GenCos should resist the punitive charge or go to court to seek redress.
“Government should allow the private sector to be independent and have a level playing field and make enough profit to bring in more investors to the economy.
I completely agree with the GenCos. The government should not unnecessarily impose taxes on them.
The GenCos should go to court or regulatory authorities so that these things are resolved amicably.
They would make their opinions well known to government in such a way that the economy of the country should not be affected.
They have the right to take government to either Industrial Court or the conventional court because what the government is doing is not backed by law,” he opined.
Mr Moses Adigun, a civil servant and a power consumer was in support that the GenCos should close down. For him, there was no difference between when they close down and when they are in operation.
“Whether they close down or not, their impact is not being felt. What is the difference between when they close down and they are operating? If they so wish, let them close down. In my house, we only enjoy power supply for two or three hours in a week and we pay for those hours that we lack supply, ” he said.
A housewife, Mrs. Josephine Ezekiel, called on the Federal Government to hasten the process of reform because Nigerians have not felt better since their engagement.
“I want the Federal Government to not only withdraw every support for them, their contract should be terminated. However, they should do a thorough due diligence on any other company they are engaging to ensure we don’t get messed up again,” she said.