Gas Supply Shortages and Indebtedness Strain Power Supply

  • The Electricity Generating Companies, GenCos, which utilise gas for power generation in their power plants, have pointed to some fundamental challenges.
  • The Managing Director of Suneses Energy Limited, Dr. Emmanuel Udofia, said that the government and relevant agencies have developed many programmes, targeted at ending gas flaring by 2030.

 The Electricity Generating Companies, GenCos, which utilise gas for power generation in their power plants, have pointed to some fundamental challenges, especially limited gas supply and huge indebtedness.

The Executive Secretary of the Association of Power Generation Companies, Dr Joy Ogaji, noted, “We had just about 27 per cent of payment for our 2024 invoices—a shortfall of 63 per cent, excluding the N2.5 trillion debts owed the GenCos from 2015 to December 2023.”

She also said, “Payment is our major challenge.  Payment is also what causes gas challenges. There is abysmal payment for the electricity, which will make gas a challenge as it is not a free product.”

However, the Acting Chief Executive Officer, CEO of the Nigerian Bulk Electricity Trading (NBET) Plc, Johnson Akinnawo, did not respond when asked to comment on factors delaying settlement of invoices as when due, a development the GenCos said also hinder operations in the value chain.

Meanwhile, the Chief Executive Officer of the Centre for Promotion of Private Enterprise, CPPE, Dr. Muda Yusuf, said, “There are two major issues regarding the availability of gas. The first has to do with the sabotage of gas pipelines in the Niger Delta. There have been incidences of pipeline vandalism and disruptions. Unlike illegal refining and oil theft, the vandalism of gas pipelines constitutes acts of economic sabotage.”

He noted, “I think the bigger issue with the GenCos has to do with illiquidity, which limits the capacity of the GenCos to settle their financial obligations to the gas companies. I think that has been a recurring issue.”

“According to reports, as of 2024, the outstanding invoice to be settled by the Nigerian Bulk Electricity Trading (NBET) Plc stood at N2.7 trillion. If the GenCos don’t have liquidity, how would they pay for their gas?” he said.

He added, “This is a big problem because lack of liquidity in the electricity supply chain has been a recurring issue, and the earlier we can resolve it, the better for the sector. We need a framework to ensure sustainable liquidity in the electricity supply ecosystem. There have been commercial losses and technical losses, which affect liquidity. There has also been the issue of low tariffs, which are not adequate to cover the cost of the product.”

“It’s quite a complicated situation, but it can be fixed with the right framework, right strategy, and stakeholders’ engagement. I think these are the dimensions of the issues to be addressed,” he said.

However, the Managing Director of Suneses Energy Limited, Dr Emmanuel Udofia, said, “The government and relevant agencies have developed many programmes targeted at ending gas flaring by 2030. Indeed, ending gas flaring requires massive investments to harness associated gas for productive purposes, continuous improvement in pricing regime and growing the nation’s economy to create robust domestic demand for gas.”

Leave a Reply

Your email address will not be published. Required fields are marked *