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Babatunde Fashola

Expert berates Gencos, Discos for not investing enough since take over

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Energy analyst, Dr. Gayus Musa has lampooned Power generation and distribution firms for not investing or drawing inflow of foreign direct investment (FDI) since they took over the sector few years ago. He accused the companies of trying to jerk up tariffs and use it to develop their infrastructures instead of driving FDI to deepen services.

In an exclusive interview with Business Hilights, he challenged both Gencos and Discos to make public the figures of their investments since take over.

He said government is treating them with kids gloves instead of worrying them to bring in the FDI they agreed before the Bureau of Public Enterprises (BPE) handed over the infrastructure to them.

According to him, “Unless government worry both Discos and Gencos to do exactly what they signed at onset, regular supply of electricity will continue to be a mirage in Nigeria”.

“It is wrong for the government to approve a dine as payment guarantee for companies in power sector because, before they won the bids, they agreed to invest in the development of the industry.

“The only lawful thing government can for the companies is to compel all ministries, departments and agencies who owe the power companies to pay up so that they can get funds to do their business instead of guarantying payment for them using tax payers’ money,” Musa said.

It would be recalled that the Federal Executive Council (FEC) last week approved a payment guarantee assurance by the CBN for power generating companies (Gencos) to solve liquidity problems in the energy sector and avert an impending nationwide power shutdown.

Gencos had cried out that they were not able to meet their obligations to DisCos portending an imminent nationwide power outage.

The Minister of Works, Power and Housing, Mr. Babatunde Fashola, announced this to State House Correspondents, explaining that the apex bank would hold N701 billion for regular payment for power generated onto the national grid.

He said that the government’s bulk energy buyer, Nigeria Bulk Electricity Trading (NBET) had series of liquidity problems which made it difficult to fulfil its delivery obligations.

Fashola said “The liquidity problems that have characterised the market have affected the Nigeria Bulk Electricity Trading (NBET’s) ability to deliver on its PPP obligations to the Gencos. So going forward in order to strengthen the NBET, CBN is providing a payment assurance guarantee for energy produced by any Genco, so that Gencos can pay their gas suppliers when they are paid so that the hydros can continue to operate.

“What we seek to achieve here is to bring some stability to the production side of the power value chain and also give confidence to investors who want to come in, who are concerned about how to recover their money.

“They see now payment assurance and also people who are planning to invest in the gas sector which is being championed by Ministry if Petroleum also are seeing the same thing in terms of payments for gas produced.

“So the approval of council was to provide this guarantee for NBET which is a 100 per cent government owned company to pay on a monthly basis its obligations, for what was actually produced onto the grid, to the Gencos that are its customers.

The minister said that the nation’s power transmission capacity had moved from 5,000 megawatts to 7,000 megawatts while generation had moved up from below 2,000 megawatts to 4,000 megawatts.

The minister denied that the transmission company of Nigeria (TCN) did not have the ability to take in all the energy generated, adding that government was regularly expanding its transmission infrastructure.

However, the minister failed to explain why most of generated powers were not distributed; rather they are stock at the generation point.


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