Addressing the challenges of power supply across the country on Tuesday, March 14, the Managing Director of Mainstream Energy Solutions Limited, Lamu Audu, attributed the irregularity in the supply of electricity in Nigeria to a series of problems ranging from inability of generating companies to redeem backlogs of invoices to persistent wasting of energy produced by Generation Companies.
“The last invoice we got for the energy we supplied to the National Grid was in December, and it was just 19% of our invoices,” said Mr. Audu whose company is the concessionaire of Jebba and Kaiji Hydro Power Plants, which are located in Niger State. “Our invoice for the month of December was N5.4 billion, but we were only paid N1 billion. The total outstanding of our unpaid invoices is N53 billion.”
The cumulative backlogs of invoices were despite what Mr. Lamu described as the company’s restriction from supplying much of the power it generated to the National Grid. “There are two ways that happens,” he said. “One, our machines detect that the power being generated from our plants are not evacuated or utilised fully, which forces our machines to step down. Two, we receive direct instructions from the National Control Centre to reduce loads or even shut down our machines completely. It doesn’t matter that we declare our generating capacity 24 hours earlier, as is the practice. This way, we lose revenues as a result of energy not being utilised. This refusal to evacuate the energy we generate also affects our machines, leading to high cost of maintaining them.”
The consequence of this was investors in the company have become skeptical about putting in more money for the purpose of recovering more capacity of the two plants, said Mr. Audu. “Our shareholders said that if the power we generate are not being fully utilised, why should they invest more for the purpose of recovering energy that isn’t going to be used?”
Mr. Audu also revealed that “Between February and March, the energy not evacuated from Jebba and Kainji plants are 8,574 Megawatt-Hour. This translates into the loss of the sum of N97,077,529 by this company in just under one month.”
As to why the power generated wasn’t being evacuated despite the yearning for more electricity across Nigeria, the energy stakeholder said, “TCN (Transmission Company of Nigeria) is in the best position to answer this, because it is between the GenCos (Generation Companies) and DisCos (Distribution Companies). In our own assessment, we believe that the inability to evacuate power is mostly as a result of DisCos not being able to take the load, either deliberately or due to some other challenges. Deliberate because they are trying to minimise their loss because they are not investing as much as the GenCos.”
Beyond the debts and poor power-distribution infrastructure of the energy market, Mr. Audu appealed for government interventions in stabilising electricity in Nigeria, highlighting a three-point solution.
“First, the government should declare that Generation Companies can initiate bilateral agreement with any eligible customer that wishes to,” he preferred. “At the moment, we have just a single buyer in the energy market, which is NBET (Nigerian Bulk Electricity Trading).
“Secondly, there’s a need for tariff review to make power affordable through subsidies to low-income earners, as is the practice even in developed countries,” he said further.
“Thirdly, since our investment is to recover and sustain capacity, payments to Generation Companies should be based on deemed capacity, that is available capacity, instead of paying for just energy evacuated. This will check the wasting of energy.”
