Gencos oppose Senate’s call for reversal of sector privatization

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Electricity Generation Companies (GenCos) on Sunday kicked against the call by the Senate for a reversal of the Nigerian power sector privatisation.

The lawmakers had called for the upturn of the power sector privatisation following the inability of the private operators to deliver electricity to Nigerians more than six years after they took over the responsibility of power generation and distribution.

The power generation companies under the aegis of Association of Power Generation Companies (APGC) said the Senate should channel their efforts towards sorting out the current challenges the sector is faced with instead of seeking for the reversal.

Disclosing that the indebtedness of the power sector to electricity producers had risen to about N1tn since November 2013 when the industry was privatized, the power producers said they only received a payment of between 11 to 30 per cent of their invoiced amount on a monthly basis.

The GenCos warned that reversing the privatisation of the sector was not the solution to the current abysmal status of the power industry.

“It is very pertinent to state that the reversal of the privatisation exercise of 2013 is not the solution to resolving the current abysmal state of the sector,” the Association of Power Generation Companies, said in a statement.

The power generation companies also complained that close to seven years after privatisation, a number of the guidelines governing contract have still not been activated, leading to non-payment for power generated and supplied to the national grid.

“This has led to a huge outstanding debt of approximately N1 trillion owed to gencos from the inception of privatisation till date. All contracts remained inactivated, notwithstanding the declaration of the Transitional Electricity Market (TEM), which heralds contract effectiveness.”

The Senate President, Ahmed Lawan, recently called for the reversal of the power sector privatisation, which according to him, had failed to deliver.

The GenCos who also empathised with Nigerians over the poor state of power supply, noted that the current situation was adversely affecting its operations and jeopardising its investments.

The APGC said the situation had a very high potential to negatively impact the inflow of foreign direct investments to the country.

The Gencos explained that soon after the privatisation, it became obvious that key guidelines set by the Bureau of Public Enterprises and operators, as stipulated in the governing contract, had still not been activated.

It further stated that notwithstanding the non-payment of Gencos’ invoices for power supplied to the national grid, the companies took loans and other credit facilities to fund the capital expenditure required to meet the minimum performance threshold by ramping up capacity.

“It is very important to stress that the Gencos have doubled their available capacities from 4,214MW at takeover in 2013 to 8,145MW in 2020. Out of the 8,145MW available capacity, only 3,987MW is generated for Nigerians. The balance 4,159MW is stranded as a result of constraints in the national grid capacity.

“Gencos in addition to acquiring the assets for over $1billion , have invested heavily in ramping up nameplate capacity through frequent maintenance, minor and major inspections and also major overhauls,” the generation companies said.

It stated that despite the outstanding debts owed by the federal government and failure of government agencies and other operators in the power value chain to honour their commitments, its members had continued to deliver.

“To this end, we view the call by the senate to cancel the privatisation exercise as premature and as such focus should be on the structural issues that we have highlighted above.

“Most importantly, emphasis should be placed on fact-finding with respect to commitment of the various stakeholders in the fulfillment of contractual obligations that were drawn up to guide and regulate the privatisation of this all-important sector,” the power producers said.

Peace Obi


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