Electricity generation companies (Gencos) in Nigeria’s power market now rely on other sources of revenue to keep their operations running as well as to ensure that power is supplied to the national grid, the Executive Secretary of Association of Power Generation Companies (APGC), Dr Joy Ogaji, has disclosed. Ogaji said that the Gencos’ revenues had been hit hard by the lack of contract sanctity in the country’s power market. She stated that the market now runs on a ‘best endeavour’ which is lost and gives room for repeated business conjecture.
Speaking further, Ogaji said: “The third determinant is the need for the effectiveness of contracts. One of the notable functions of a contract is to facilitate forward planning and to make provision for future contingencies. “The current market situation gives room for conjectures, no contract is binding, and all are on the best endeavour.” According to her: “The impact is more on the Gencos, who due to lack of (effective) contracts to backstop the gas supply agreements (in terms of bankability), is in a tight corner.
“Instances abound where Gencos have had to resort to other means other than the electricity market to support the gas and other services just to put power on the national grid.” She noted that while the electricity market has the potential to absorb significant investments and provide rewarding returns on those investments if the market is allowed to run on a competitive basis with little or no government interference, the current situation was different.