Electricity generating companies (Gencos), and their counterparts in the distribution networks, (the Discos), at the weekend traded blames, accusing each other of being responsible for their inability to attain full capacity utilization and productivity as a result of huge debt overhang
The parties were attending a one day power dialogue in Abuja tagged’’ addressing liquidity issues in the distribution value chain’,’ organised by Nexter Power, which was convened to discuss pragmatic ideas for developing Nigeria’s electricity market, share knowledge, explore investment opportunities, generate ideas for policy formulation and network with stakeholders from the power sector and other related sectors
Chief Executive Officer of Niger Delta Power Holding (NDPH), Mr Chiedu Ugbo fired the first salvo when he disclosed that the challenges facing the GenCos presently was as a result of 44.7% of the total of N235b outstanding debt owed by the DisCos as at August and other liquidity issues affecting the sector.
He further stated that since the first power plant establishment in 2011, an estimated energy invoiced by the 8 power plants amounted to N235 billion and that of this estimate; about 55.3% has been paid
He said’ the implication is far reaching: capacity utilization, low productivity, inability to meet obligations, asset replacement issues and finally it challenges us as a going concern.”
Also speaking on behalf of the DisCos, The Chief Executive Officer of Association of Nigerian Electricity Distributors, ANED, Mr Azu Obiaya, assessing the situation, said the DisCos were experiencing a revenue shortfall of N38 billion and that MDAs owed DisCos N58 billion.
He further explained that the DisCos have issues accessing debt financing as their books have been ‘bedevilled’ by the NEMS I intervention, and shortfalls associated with other factors including; tariffs that are not cost reflective, the payment thresholds put in place to prevent market collapse, collection losses that were removed, interest due to NBET (not passed on to consumers), delay in implementation of MYTO 2015, MDAs not paying debt, low generation , forex issues, TCN imbalance, litigation and so on
Mr Azu also maintained that the solutions to the challenges earlier outlined include: cost reflective tariffs, proper allocation of risk and understanding the balance between economic efficiency and social wellbeing.
Earlier in a remark at the occasion, the Principal Partner Nextier Advisory, Mr Patrick O. Okigbo listed the challenges confronting the power value chain to include: Lack of transparency in the Distribution Companies, the position of the Nigerian Electricity Bulk Trading Plc. in the distribution value chain, the rejection of energy on the grid, provision of meters, status of the stabilisation fund, etc.
Mr. Stephen Ogaji, Head of Gas at the Niger Delta Power Holding Company NDPHC, also highlighted the need for the Distribution companies to be transparent with their collection, adding that the plant is always constrained not to reach 4,000 Megawatts in other to avoid rejection of energy on the grid.