The Federal Government of Nigeria and the Nigerian Bulk Electricity Trading (NBET) PLC, appear to have concluded plans to approve an extension to the N701 billion given to the generation companies (GENCOS) in 2017 to cover its losses.
The fresh package, which is expected to be N600 billion, cover for the shortfall in remittances made by the distribution companies (Discos).
According to THISDAY, the Central Bank of Nigeria is expected to fund the scheme and determine the tenure of the loan. The last role out was a ten-year package.
Joy Agaji, Executive-Secretary of the Association of Power Generation Companies, told THISDAY that the fresh payment which is still a rumour to the gencos is simply a palliative measure.
“As far as we are concerned, it’s a rumour until we receive a formal notification. Relative to how we feel as Gencos, these are palliatives to the symptomatic decadence of the sector. Until the government decides to move from palliatives to cure, we will continue in this unending and incomprehensive dance,” Agaji stated.
Based on the design of the Nigerian Electricity Supply Industry, NBET buys power from the Gencos, making them responsible for the payment of monies to the power producers.
However, the cost of production can only be recouped when the Discos sell power and collect their pay. Agaji told the News Agency of Nigeria in November 2018 that the Gencos were owed N500 billion between 2013 and December 2016.
She said they had not been paid since June 2018 to the date the interview was published. Agaji further noted that the Gencos received only 80 percent of the monthly invoice submitted for draw-down on the N701 billion.
The Discos have however maintained that the tariff paid for electricity consumed is not reflective of the cost of production and delivery.
While the Discos have a billing rate of over 60 percent, it is not the same for revenue collection. In several Discos, revenue collection is less than 50 per cent according to quarterly reports published by the Nigeria Electricity Regulatory commission.