GenCos threaten to shut down operations over FG’s 0.75% administrative charge

Posted by Isaac Anumihe Abuja | 23 September 2019 | 673 times

Gmail icon

Power Generation Companies of Nigeria (GenCos),  at the weekend,  vowed to declare force majeure on their operations  if the Federal Government’s 0.75 per cent administrative  charge is implemented.

Nigeria Bulk Electricity Trading (NBET), is  a public liability company created by the Federal Government to incentivise private investment in power and act as the buffer to the GenCos.

But it was  however, discovered that the thermal  GenCos are not making  pro-rata payments of 15 per cent  of the gas invoice to gas suppliers and transporters and so decided to take over the payment through the compulsory 0.7per cent per cent charge.

Speaking to newsmen, in Abuja, the Executive Secretary of Association of Power Generation Companies (APGC), Dr Joy Ogaji, said that if the thermal GenCos should comply with the directive, some of them  would fold up.

“On September 13,  2019  Nigerian Bulk Electricity Trading (NBET) issued a letter to individual thermal GenCos directing them to obtain, as a matter of urgency, their respective board approvals or resolutions, bequeathing responsibility for payment of gas and transportation to the respective supply companies for an administrative charge of 0.75 per cent.

“Given  that a thermal GenCo’s’gas bill is between 50 per cent  and 70 per cent  of their total monthly revenue, depending on their efficiency and tariff, the implications of carrying out NBET’s directive of pro-rata payments is that a thermal GenCo with about 60 per cent of its total revenue as gas cost, will be left with about 6 per cent [15%- (0.6*15%)] of such total energy invoice to operate the power plant!

This is because of the 15 per cent  received from the market, about 9 per cent must be allocated to gas as pro-rata payment. This is certainly not sustainable” she said.

Ogaji argued that if NBET gets away with the directive, it would make N2.7 billion for just collecting and submitting invoice to Central Bank of Nigeria (CBN). (Daily Sun)

Source: News Express

Readers Comments

0 comment(s)

No comments yet. Be the first to post comment.

You may also like...