GenCos gulp N152.9 bn of N701 bn Power Sector Fund in seven months

The Nigeria Bulk Electricity Trading Plc (NBET) has disbursed a total of N152.974 billion to 23 power generation companies (GenCos) within the first seven months of 2017, according to a report.

This disbursement represented 21.6 percent of the N701 billion payment support facility provided by the Central Bank of Nigeria (CBN) for Nigeria’s power sector

A document revealed this also contained other payments made by the NBET to the Gencos from what it collected from the market within the seven-month period, amounting to N83.351 billion.

The document further showed that aggregate payments from the CBN facility and market collections to the Gencos within the period totalled N236.353 billion.

It also represented about 80 percent of the generating company’s invoices within the payment cycle and in line with the NBET’s strategy of paying the Gencos’ monthly invoices in this regards.

A further breakdown of the payment details disclosed that while all the traditional Gencos in the country – Kainji, Jebba, and Shiroro hydro plants, as well as Egbin, Transcorp Ughelli, Olorunsogo, and Shell Afam VI, amongst others, consistently got paid within the period, up to eight out of the 10 power plants built under the National Integrated Power Projects (NIPPs) and managed by the Niger Delta Power Holding Company Ltd (NDPHC) equally got paid their invoices, to buttress a recent claim by the Managing Director of the NDPHC, Mr. Chiedu Ugbo, that the N701 billion had saved the power sector from near collapse.

The document stated that in January, the NBET paid the Gencos N17.798 billion from the CBN facility and N10.261bn from the market collection to bring its total payment for the month to N28.063bn; in February, it paid N19.419bn of CBN facility and N12.694 billion of market remittance to the GenCos to make it N32.113bn for the month; and subsequently remitted in the March payment cycle to the GenCos a total of N35.504bn containing N22.716bn from the CBN facility and N12.787bnfrom the market.

In April, N33.136 bn was paid to the GenCos, out of which N20.414 bn and N12.723bn were from the CBN facility and market collections respectively; payments for May, were N22.819bn(CBN facility) and N12.768bn (market collections), totalling, N35.587bn, while that of June was N35.717 billion (that is, N24.424 bn (CBN facility) and N11.293bn (market collections). For July, the NBET paid the GenCos a total of N36.209bn, containing N25.383 bn, from the CBN facility and N10.825bn, collected from the market.

In March 2017, the Federal Executive Council (FEC) approved that the CBN guarantees payments by the NBET to Gencos for electricity they generate through the N701bn facility. The NBET would also have about 10 years to liquidate the loan to the CBN.

A government memo, which was obtained in June 2017, stated that the NBET would administer the loan, which has a two-year moratorium and five percent annual interest rate, over a period of two years.

Meanwhile, it was also learnt that NBET has again extended the execution window for the power purchase agreements (PPAs) it signed for Nigeria’s 14 pioneer utility-scale solar plants by another six months to enable promoters of the projects to meet up with the condition precedents in their PPAs.

The PPAs were first signed in July 2016 between the promoters and Nigeria’s federal government, their tenure was however renewed in July 2017 after they expired and made to last for six months which again expired in January 2018.

Sources in the NBET said that another six months extension was given on the PPAs, which were reportedly distributed between the African Development Bank (AfDB) and World Bank by the government. Both development finance institutions have reportedly been working on closing them out to enable promoters to achieve financial close for the projects.

Collectively, the 14 solar power projects would when completed, generate 1,125 megawatts (MW) of solar electricity to augment Nigeria’s electricity generation capacity. They will cost the promoters about $2.5bn.

NBET in 2017 also announced that the promoters of the solar IPPs had posted their development securities of $20,000 per megawatt to it via letters of credit. The securities, it explained then, were to guarantee that the IPPs would achieve financial closure by their target closing dates.

Simon Ugwu