The Association of Power Generating Companies (AGPC) has said that generation companies were owed over N3 trillion in unpaid debts as of 2024, Thisday reports.
A recent statement signed by the Board Chair of the Association of Power Generation Companies (APGC), Col. Sani Bello (rtd), revealed that the operations of member companies are being severely constrained by significant debts.
Despite these financial challenges and other difficulties since their takeover in 2013, the power generation companies (Gencos) have adhered to their contractual agreements and increased their capacity, even though systemic constraints have hindered progress.
Bello highlighted that although Gencos’ power is fully utilized, they do not receive full payment for their services. This issue persists despite introducing the Partial Activation of Contracts in the Nigerian Electricity Supply Industry (NESI) on July 1, 2022, and implementing the minimum remittance order, bilateral market declaration, and waterfall arrangement.
He wrote;
“Gencos are currently owed over N2 trillion for the power they generated, put into the national grid, and consumed by end users. This is in addition to the over N1.7 trillion naira, funding gap created in the recent supplementary MYTO order 2024 without a designated fund to fill the gap.
“This huge debt outlay is now greatly inhibiting Gencos’ ability to meet their obligations to lenders, necessary maintenance, spare parts procurements, and employee-related obligations etc. The Gencos expectations of being settled through external support such as the World Bank PSRO has also been dampened due to other market participants’ inability to meet their respective distribution linked indicators (DLIs), enshrined in the Power Sector Recovery Program (PSRP).
“Access to forex is another problem given that major operation and maintenance needs in the generation subsector are dollarized, the importance of a specialised window or stable dollar allocation option for the Gencos cannot be overemphasized.
“Gencos are of the position that there is a need for a coordinated approach by all stakeholders in the NESI to address the liquidity issue realistically and sustainably in the power sector so that Nigerians can have access to reliable electricity supply.
“In the light of the severity of the issues highlighted above, the Gencos are requesting that immediate and expedited action is taken to prevent national security challenges that may result from the failure of the Gencos to sustain steady generation of electricity of Nigerians.”