According to the GenCos, as much as 25% of generated power is consistently wasted by the TCN. The Gencos say that the TCN lacks the capacity to wheel about 4000 megawatts of electricity generated due to its obsolete transmission equipment. This costs the Gencos hundreds of millions of naira.
Compounding their woes, the GenCos are being owed huge amounts by the Distribution Companies, DisCos. The current estimate is about 140 billion naira.
In addition, the current challenge in the country with access to foreign exchange has made things much more difficult. Sourcing for ForEx from the parallel market for the importation of important parts and equipment as well as servicing of foreign credits have become increasingly difficult and unsustainable.
The Managing Director and CEO of Mainstream Energy Solution Ltd, a GenCo to which the Kainji and Jebba Hydro Power were concessioned to for a period of 30 years, Engr. Lemu Audu, said the two plants are currently owed N44bn for electricity already generated and sold. He further stressed that it had become extremely difficult to keep the plants running as the weight of the debts are crippling.
He disclosed that the plants may have no other choice but to shut down in the absence of an urgent action especially regarding the debt situation and for the government to fulfill and review some aspects of the Share Purchase Agreement, like providing partial risk guarantees to the operators; liberalising the off-taker provision, which limits the power operators from selling generated power to other end users other than the national grid and finally creating access to forex for the operators.
He explained further,
Another great challenge is the commercial issue. This is seriously militating against our ability to continue to recover capacity and, in fact, to sustain what we even have today. We have serious liquidity issues in the Nigerian electricity market, to the extent that our invoices are not settled as at when due and completely
In their own defence, the DisCos blame their huge debt on poor revenue collection from customers. They say it is a consequence of a few factors: economic situation of customers, electricity theft as well as vandalism in some places.
These issues add up against the backdrop of a country heavily undersupplied and in dire need of improved electricity generation. Many industries shut down in the last year as overheads went out of control majorly due to high cost of running generating sets to power production.
On their part, the TCN insists that the position of the GenCos is false and that it has the capacity to wheel as much as 6000 megawatts of electricity. This was disclosed by TCN’s Managing Director in charge of Transmission Service Provider, Engr. Tom Uwah,
Those allegations are false and baseless because we have since 2013 invested massively on our transmission infrastructure. We are not ready to join issues with anybody. But all I can simply tell you is that our infrastructure can conveniently wheel 6000MW and I know our generation is far below that threshold. Let them face their businesses or look elsewhere.
The Bureau of Public Enterprises (BPE), which is the agency of government in charge of privatisation of all government utilities, through the Acting Director General, Dr. Vincent Akpotaire, explained that the partial risk guarantees had not been provided by government, but expressed hope that early this year, the power companies would benefit from the guarantees.
Yes, they have not received the guarantees because the Federal Government had to review the guarantee scheme, particularly as it affects private organisations. The Federal Ministry of Finance and the Debt Management Office are involved and are seriously working on it. By early next year, they should be able to finalize the work to enable them have it. We are sorting it out and the operators are aware.