Nigeria’s power generation capacity may soon drop if the federal government delays in paying the N86 billion debts it owes Egbin Power Plc for electricity supplied.
Egbin Power Plc is regarded as the single largest electricity generation plant in sub-Saharan Africa, its indebtedness to banks has reached $325 million (N99.13 billion).
The country has been enjoying a relative improvement in electricity supply in the last two months and this may further reduce as Egbin continue to face financial hurdles.
The Chief Executive Officer, Egbin plant, Dallas Peavey Jr., said the firm’s electricity generation had dropped to 425MW, as a result.
Peavey made the disclosed this at the weekend during the company’s scholarship award programme to schools within Ijede community in Lagos State.
According to him, “Normal generation in Egbin is about 1,320 megawatts. Currently, we are doing about 425MW, only 30 percent of what we should be generating simply because of gas,” he said on the sidelines of the company’s 2016 scholarship award ceremony for students in Ijede Town, Ikorodu.
He further said, “The Transmission Company of Nigeria cannot take the full amount of power that we can generate. Right now, the biggest issue is gas.“On top of that, we are owed over N86 billion by the Federal Government; we have been producing but we haven’t been paid for almost six months. The last money that we got was about 16 percent of the total bill for the power that we generated for the national grid.
He added, “The amount is the money owed by the government through the Nigerian Bulk Electricity Trading to produce power to the grid by generating companies.”
Peavey said the firm is currently grappling with economic woes occasioned by difficulties in accessing the foreign exchange.
He noted that at the time of the acquisition of the asset, the exchange rate was N150 to the dollar, the bus had since doubled, which means the company would be paying almost double of what it owes the banks. He said that the huge debt profile was equally creating some bottleneck in the company’s planned capacity expansion initiative.
He said that the company is now faced with the harsh reality of paying back in the time of economic downturn having raised capital from banks. He said that the huge debts have put the company in a cash liquidity crisis that had reduced its ability to pay for gas supplies, and hence threatens to completely undermine the electricity value chain and its ability to continue to serve customers.
He lamented the persistent shortage of gas supply despite the huge investment the owners have made to boost the capacity of the power plant. He noted that Egbin plant has not been able to meet the required capacity because of gas, despite the increase in the company’s generation ability.
He said the company is considering other sources of electricity generation that would complement gas, such as Low Pour Fuel Oil, one of the products in the fractional distillation of crude oil.