Nigeria’s already bad electricity supply situation may degenerate further as Nigeria’s six power generation companies on 10 August threatened to shut down electricity supply over N156 billion in debts owed to them by government agencies.
The six generation companies are; Afam Power Plc; Kainji Hydro Electric Plc, Sapele Power Plc, Shiroro Hydro Electric Plc and Ughelli Power Plc.
In a joint press release made available to the media today, the six Gencos said that they cannot sustain power supply due to the heavy debts owed by government agencies as well as the rising cost of equipments needed to sustain power supply in the country.
“In 2013, exchange rate was 150 naira per dollar. Today it is 310. How can we repair, equip, acquire new turbines at this rate of 310 naira per dollar and yet still operate with an old tariff?” the companies stated.
Banks, the companies complained, are now reluctant to extend them further credit.
A Lagos High Court recently reversed 45% increase in electricity tariff granted the power firms in February this year citing lack of due process. The reversed electricity tariff was based on an exchange rate of N199 to the US$ and a lower inflation rate than the current 15.6%. This means that the generation companies will require a far higher tariff structure to remain profitable, a big challenge considering Nigerians are already hard pressed by a high cost of living.
Only last week, Transcorp Plc, which owns Ughelli Power Plc announced that it is suspending plans to build a $1 billion power plant in additional to its current power plant due to issues with gas shortage and difficulties in raising capital as result of the current economic downturn in the country.
“How do you make the investments when you are generating far below your current capacity due to gas problems?” Chief Executive Officer of Transcorp, Emmanuel Nnorom said.
Transcorp is said to be owed over N20 billion by the Nigerian Bulk Electricity Trading Plc, for power generated and not yet paid for.
“My number one problem would be gas, owing to much capacity available that has not put to use,”
Transcorp’s Ughelli power plant has an installed capacity of 700 MW but currently generates an average of 300 MW due to issues with gas.