GenCos, the power-generating firms that rely on gas, responded to the situation by identifying two pressing concerns—insufficient gas supply and severe financial indebtedness—that continue to hinder electricity generation.
The Executive Secretary of Association of Power Generation Companies, Dr. Joy Ogaji, said: “We had just about 27 per cent of payment for our 2024 invoices. A shortfall of 63%, excluding the N2.5 trillion debts owed the GenCos from 2015 to December 2023.”
She also said: “Payment is our major challenge. Payment is also what causes gas challenges. There is abysmal payment for the electricity which will make gas a challenge as it is not a free product.”
When pressed for comments on the persistent delays in settling invoices, the Acting CEO of NBET, Johnson Akinnawo, declined to respond. GenCos argue that this failure to make timely payments significantly hampers efficiency within the power sector.
Speaking on the issue, CPPE CEO Dr. Muda Yusuf stressed that gas availability is hampered by two major factors, one of which is pipeline vandalism in the Niger Delta. He argued that, unlike illegal oil refining, damaging gas infrastructure directly
“I think the bigger issue with the GenCos, has to do with illiquidity, which limits the capacity of the GenCos to settle their financial obligations to the gas companies. I think that has been a recurring issue.”
Read also: Rising Electricity Costs Crippling Teaching Hospitals
“According to reports, as of 2024, the outstanding invoice to be settled by the Nigerian Bulk Electricity Trading (NBET) Plc stood at N2.7 trillion. If the GenCos don’t have liquidity, how would they pay for their gas?
“This is a big problem because lack of liquidity in the electricity supply chain has been a recurring issue and the earlier we’re able to resolve it, the better for the sector. We need a framework that can ensure sustainable liquidity in the electricity supply ecosystem. There have been commercial losses and technical losses, which affect liquidity. There has also been the issue of low tariff, not adequate to cover the cost of the product.
The speaker acknowledged the complexity of the situation but expressed confidence that it could be effectively addressed through a well-structured framework, a strategic approach, and active engagement with key stakeholders. They emphasized that these elements were crucial in tackling the core dimensions of the issue and finding a sustainable solution.
