Power producers owe gas suppliers N200bn, demand N600bn payment

Power producers owe gas suppliers N200bn, demand N600bn payment
Mr Babatunde Fashola, Minister of Power Works and Housing

Power generation companies in the country on Wednesday said gas producers were cutting down supplies to thermal electricity generating plants as a result of the N200bn indebtedness to them by the Gencos.

According to the power firms, this has impacted negatively on the state of electricity generation across those the country, as they called on the government to help prevail on the industry to clear the N600bn debt being owed the generation companies.

They also announced their support for the recent declaration of eligible customers in the sector by the Minister of Power, Works and Housing, Babatunde Fashola, which is in contrast to the position of the power distribution firms.

The Executive Secretary, Association of Power Generation Companies, Dr. Joy Ogaji, told journalists in Abuja that the inability of the firms to adequately pay gas suppliers was the major reason why many thermal power plants were starved of gas supply despite the improvements in gas production.

Ogaji explained that the stability in the Niger Delta had actually led to improvements in gas production, but noted that the several billions of naira being owed by the Gencos was limiting their ability to access gas.

This, according to her, has also made oil and gas companies like Total and Shell to demand for upfront payments before they can supply gas to power producers in the country.

She said, “For us to be able to procure gas, we need money. Currently, gas companies are owed several billions by us. We are being owed nearly N600bn and we are owing gas companies nearly N200bn.

“Most of them now say they cannot supply anymore until we pay. In fact, most of the companies like Shell and Total, they now do what we call pay-before-service. And since the market is paying us 29 per cent out of the expected 100 per cent, how do we pay for the gas?

“Some of these power companies that you’ve heard about cannot put all their machines on, they will just select from maybe out of five machines, they will just put on one or two, depending on what you can pay for with respect to gas. That’s the situation and it is a precarious and pitiable state.”

The Gencos’ spokesperson further noted that some persons and organisations had made enquiries on the modalities for accessing power from the generation companies as eligible customers, but explained that the process would not start until there was a regulatory framework from the Nigerian Electricity Regulatory Commission.

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