The electricity sector loses 420 billion in annual revenue – Gencos
The monthly deficit in remittances to the power sector stands at 35 billion naira, the executive secretary of the Association of Power Generation Companies, Joy Ogaji, said on Thursday.
This amounts to 420 billion naira per year.
APGC is the umbrella organization for power generation companies in Nigeria. The Gencos generate electricity which the Transmission Company of Nigeria evacuates to the electricity distribution companies, known as DisCos, for onward distribution to end users.
Responding to a question raised at a forum on whether Nigeria should build more open cycle gas turbines or combined cycle gas turbines, Ogaji said Gencos was ready to build it if it there were enough funds.
Gas turbines, in this term, whether open or combined cycle, are basically machines used to generate electricity.
The APGC executive, however, noted that the power sector is currently suffering a revenue shortfall of about N35 billion per month, indicating that the funding challenge in the industry is still lingering.
In her survey response, she said, “Most Gencos have this as part of their expansion plan.
“With a current market deficit of around N35 billion per month, we are not keeping our word. Finance is the cornerstone.
In his reaction to the conversation, the Chairman of the Nigeria Consumer Protection Network, who served on the National Technical Investigation Panel on Power System Collapses/System Stability and Reliability (June 2013), Kunle Olubiyo, asked whether the 35 billion naira was for market remittances.
He said annual market remittance shortfalls could reach 420 billion naira when 35 billion naira were multiplied by 12.
Responding to Olubiyo, the APGC executive said: “Absolutely”.
When asked if the shortfall also included capacity payments, Ogaji said no, adding that it was only for energy.
“It’s in the second quarter. The third quarter can be interesting,” she said.
She explained that the electricity production was based on the system operator’s needs, because the energy was instantaneous.
“The bottom line is that there is no trade in the Nigeria Electricity Supply Industry (NESI). What we have is something I don’t know the name of yet, something close of Santa Claus,” Ogaji said.
She further said that the sector has forced the Gencos to worry about how they will be paid after the electricity becomes available.
“As a Genco, you are looking for foreign currency to maintain your plant. Looking for currency for O&M and creditors on an acquisition loan taken out when the naira to the dollar was at N/$157. You beg the TCN to ship you, then the gas suppliers to give you gas and gas carriers to carry your gas.