GenCos Warn Federal Government On Impending Inevitable Shutdown Unless …..

APGC Executive Secretary, Dr. Joy Ogaji

***Says Era Of Operating Under “Suffering And Smiling” Is Gone

By CLEMENT NWOJI, Abuja

The Association of Power Generation Companies (APGC) has warned the Federal Government to resolve critical issues pledging the power generating sector, else shutting down units is inevitable.

The Executive Secretary of APGC, Dr. Joy Ogaji, gave this indication in a statement in which, she articulated the plights of GenCos and the conditions needed to be fulfilled by government to enable it remain in operation.

She particularly cited that Generating Companies in Nigeria (GenCos) are facing increasing costs to generate and deliver electricity to Nigerians due to inefficiencies in the market ranging from grid operations, liquidity challenges, and access to forex to fund plant maintenance and other foreign currency denominated projects, among others.

She said it was imperative to note that, “the norm that GenCos should continue operating “suffering and smiling” is fast gone as the cost of carrying out these maintenance patriotically has been financially exhausting.”

According to her, “GenCos without equivocation are stressing the need for government and relevant stakeholders to tackle the operational inefficiency and liquidity challenges plaguing the entire value chain and making the sector unattractive for investment by: Expediting the process of payment of the outstanding balance due to GENCOS under the CBN N213bn Electricity Market Stabilization Facility;

“Payment of the outstanding for January 2015 (invoice unpaid with MO before TEM) and outstanding/unpaid invoices from Feb 2015 to December, 2016 with accrued interests;

“Payment for available capacity for the period 2015 February to date and payment for deemed capacity for the period 2013 to date;

“And putting in place an effective financing plan to kick in upon the exhaustion of the N701bn payment assurance facility to sustain payments of invoices till 2021, when federal government projects that the NESI would be self-sustaining.”

Ogaji explained that the importance of fulfilling the requirements cannot be over-emphasized, saying that not having an effective financing plan in place would erode whatever gains that would be made when the above proposed solutions are implemented.

GenCos further demanded for effective payment security and guarantees on their exposure to the market, adding that effective payment security and sovereign guarantee is inevitable to stabilize the Nigerian Electricity Supply Industry (NESI), given the current developmental stage of the electricity market and the default rate of GENCOs in respect of their loan repayment obligations to their lenders.

“Without such instruments and the required sovereign backing, it becomes impossible for any bank or financial institution to provide any funding or credit accommodation to any GENCO, yet there is an obvious need for substantial additional investments and funding to develop the NESI and put the electricity market on the right growth trajectory.

“The foregoing makes it explicit that the GenCos are not threatening or constituting themselves as economic saboteurs via shutting down of their stations, but the forces of demand and supply imposed on them are making it inevitable for the units to shut down.”