Nigeria: Bello - Why Power Gencos Want Further Financial Support From Govt

1 October 2019

Abuja — Power generation companies (Gencos) in Nigeria's power sector would appreciate additional financial interventions from the federal government in order to remain afloat, the Chairman of Mainstream Energy Solutions, Col. Sani Bello (rtd) has said.

Mainstream Energy is currently the operators of the Kainji and Jebba hydro power Gencos in Niger state.

Bello said during a recent power sector roundtable held at its Kainji power station that power Gencos in the country could go under without financial interventions from the federal government.

He explained that when the government's backed N701 billion intervention fund from the Central Bank of Nigeria (CBN) was operational, the Gencos got up to 80 per cent of their monthly invoices for electricity generated and supplied to the national grid, but that the payment level has since dropped to 15 per cent since fund finished.

According to him, no Genco can survive on the 15 per cent invoice payments because it was not enough to meet their basic operational obligations.

"We have enjoyed quite a lot of support from the ministry of power and other agencies like the BPE, ICRC, NERC and others. Hydro power plants are by nature the cheapest power generating plants, we are much cheaper than thermal plants and therefore it is very important that we are encouraged to continue to generate power and give to the public.

"I hope the government will continue to do that and give us all the support we need. We have got our own kind of problems - we have contract which is between us and the government, and another which is between us and agencies of government, and that is to pay us. I hope the minister will do whatever is needed to see that our payments are improved," said Bello.

He further said: "Between May and June, we only received 15 per cent of our invoices. As a power generating company, I do not think we can continue to survive with 15 per cent (payment of invoices)."

"In the past, the situation was a little bit better because we used to receive between 18 and 25 per cent, but in 2018, the government gave us a guaranteed 80 per cent capacity payment. With that we were able to survive well," he added.

Bello noted that the Gencos were not, "asking for 100 per cent guarantee even though it was promised last year but let us go back to the 80 per cent guarantee which we had between 2017 and 2018. If we can get that, I think we will be able to manage well."

He also advised the government to consider activating the eligible customer regulation which the Nigerian Electricity Regulatory Commission (NERC) has approved, stating that it, "will reduce contingent liability on the government," in addition to creating cost reflective electricity tariff in the industry.

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