N701bn Stimulus: Expectation of 10 GenCos as they get N12 billion

The generating companies (GENCOs) are expected to put lots of things in order having got N12 billion stimulus ‘package.
These include payment of their indebtedness to Gas companies, investing in their operation and generating enough power so that the issue of shortfall in power generation will be a thing of the past.
This fund is expected to address so many issues affecting the power sector value chain as there should be trickledown effect on all other value chain.
The stimulus package is expected to address the issue of system collapses which hampered operation of the power sector.
It will be recalled that the Nigerian Bulk Electricity Trader (NBET) disclosed that about 10 generating companies (GenCos) have received N12 billion from the N710 billion intervention fund earmarked to sustain steady power generation in the country. In an exclusive interview, head of corporate communications of NBET, Henrietta Ighomroro, said, while NBET has commenced disbursements, the 10 GenCos had already been paid for power generation supplied to the agency of government in January 2017.
Earlier in the year, the Minister of Power, Works and Housing, Babatunde Fashola (SAN) rising from a meeting of the Federal Executive Council (FEC) had announced that council had approved N701 billion payment assurance fund to be disbursed to GenCos for power delivered on a monthly basis for two years, beginning from January, 2017 as a bail out from the liquidity crisis that engulfed the sector, particularly the generation subsector. Ighomroro said the payment for the 10 GenCos was gulping an estimated N12 billion, adding that the other GenCos were yet to receive their payment as they are yet to comply with the requisite documentations that will enable their eligibility.
“The N701 billion intervention of the federal government is a loan to NBET to, in the short term, enable it meet its payment obligations to the GenCos for power certified delivered on a monthly basis so they can have enough revenue to pay gas suppliers and run their operational and overhead costs, and it is meant to run for two years, beginning from January”, she explained.
She also disclosed that the distribution companies were able to pay about 33 per cent of their invoice to NBET for the month of January, which NBET has also paid the GenCos, apart from the one accruing to them from the Payment Assurance Scheme. She added that the intervention only provides additional fund to enable the GenCos meet their obligations. The NBET spokesperson explained further that under the arrangement, the Payment Assurance is to guarantee payment of 80 per cent of the GenCos’ invoice, while 90 per cent of that percentage is earmarked for direct payment to the gas suppliers by NBET in offsetting the GenCos bill, leaving the remaining 10 per cent for the GenCos in addition to the payment received from the distribution companies (DisCos) to run their businesses.
Speaking on the preconditions for the GenCos to qualify for the Payment assurance, the NBET spokesperson said, “It is only meant for GenCos that have the contractual pact known as Power Purchase Agreement (PPA) with NBET. We have 22 of them that are into the agreement with us, and you can be entitled after all the requisite documentations with a guarantee that you have delivered an amount of power, not just because you are a generating company”. She listed the GenCos paid for January to include Kainji, Jebba, Shiroro, Geregu, Olorunshogo, Omotosho, Shell Afam, Opai Agip, Omoku. She said that of Transcorp Delta was in progress as at reporting time, while expressing the hope that “others would meet up and be paid even before this week runs out”.

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