Why we end payment of shortfall to GENCOs – FG

The Federal Government, yesterday, announced that it has stopped the payment of the shortfall for the 4000 mega watts per hour, MWH, to the Electricity Generation Companies, GENCOs.

The Permanent Secretary, Ministry of Power, Dr. Louis Edozein, dropped the hint during a workshop on Eligible Customer Regulation organised by Nigerian Electricity Regulatory Commission, NERC, in Abuja,

Edozien told stakeholders at the workshop that the Electric Power Sector Act does not make provision for the Nigerian Bulk Electricity Trading Company, NBET, to pay for shortfall to GENCOs.

He explained that, in line with the contractual agreements, it was the consumers who should pay for the power they consume.

He said:  “In addition to that 2,000 MW, the 4,000 mwh that is consistently being delivered is not fully paid for.

“Government, through the nation’s insurance programme, is paying the generation companies for any shortfall payment from NBET.

“Clearly, that is not what the Act intends the industry to be. And ultimately, government has to exit from this role.

“So, it is this regulation that will ensure that not just stranded power but delivered power is delivered to consumers who are contractually bound to pay for it. And if they do not pay for it, they do not enjoy the service.”

He stressed further that it was obvious that there was more generation than the consumers could pay for, noting that the solution was for the stakeholders to look for the customers that were not well served under the Eligible Customers Regulation to take it and pay for it for their benefits.

“If we do this aggressively, that 2,000mw of so-called stranded generation will quickly evaporate,’’ he said.

He told the stakeholders to look for customers to buy the stranded power because it was inappropriate for government to continue to pay for the power.

According to him, government cannot perpetually pay for their power consumption.

The Permanent Secretary also told the Transmission Company of Nigeria, TCN, to stop the complaint about non-increase of tariff to the NERC and work with the GENCOs to get willing customers to buy the available power.

He said: “I have a message also for TCN. Stop complaining to NERC about your tariff. Your job is to satisfy your own customers that is GENCOs and DISCOs.

“Work with them as you have the money to find all customers using this policy who will take the power GENCOs have, contract with GENCOs at a tariff that you, the GENCOs and customers agreed, to transmit the power close to the customers. That is the way you will raise your revenue.”

The Permanent Secretary urged the DISCOs to satisfy their customers in order to encourage them to pay for the service.

He explained to the DISCOs that the reason the customers would want to take advantage of the eligible customer regulation was when they were not satisfied with the services rendered to them by the DISCOs.

“So DISCOs, this is your opportunity to service your customers better. Listen to them when there is infrastructure challenge in getting the product to them.” he said.