FG To Stop Payment For Unused Electricity

FG To Stop Payment For Unused Electricity

Onyxnewsng reports that the Federal Government will soon stop paying for unused electricity, the Nigerian Electricity Regulatory Commission (NERC) Chairman, Sanusi Garba, has said.

Garba told reporters in Abuja that issues surrounding the N1.6 trillion debt which electricity Generating Companies(GenCos) are demanding its payment, were technical.

Apparently accusing GenCos of lacking the capacity to deliver, he said that “it will be reckless to sign agreement for the generation plants for capacity that has not been delivered.”

He queried why “Nigeria will be paying for the capacity that has not been useful to Nigerians” when “the infrastructure” that ought to be provided by the firms “is not there.”

NERC Vice-Chairman, Musiliu Oseni, also gave insight into the national grid collapse on Monday and Tuesday. Oseni blamed the development on a conductor snap on a 330 Kilovolts (kV) transmission line along the Benin, Edo State axis.

The fault was however said to have been rectified yesterday.

Pointing out that some of the GenCos have no effective contract on payment of unused electricity, Garba said: “If a generation company has effective Power Purchase Agreement (PPA), that provides for payment of a certain level of capacity, then there is an obligation to pay.

“A number of generation companies however has no effective contract that guarantees the payment of the so-called unutilised capacity.

“The good thing is that we are gradually migrating to a point where the generation plants will have capacity payments being somewhere and somehow delivered along the value chain.”

The power sector regulator chieftain, also explained that the government has stopped the payment of electricity subsidy, saying the decision to discontinue it (subsidy) was entirely that of the Federal Government.

“You can’t run the electricity market on life support,” he said as he recalled that “in the past four or five years, the payment of subsidy has gradually been reduced to about N30 billion this year..

His words: “I believe all of you can understand that you cannot run the electricity market on life support and say that the investors should not get their return on investment.

“That policy decision was announced by the Minister of Finance.

Subsidy at a point was as high as N600 billion a year. and gradually has dropped to N30 billion this year. So that policy decision is from the government and we take directive from the government.”

On compensating consumers for poor service, especially as outage worsens, Garba said NERC has robust data gathering strategies and would do such. He said NERC had once compelled Jos DisCo to refund N200 million to consumers for poor service as well as Enugu DisCo.

NERC Vice-Chairman Oseni, who fielded a question on the grip collapse, said ”The first system collapse happened due to a conductor snap on the 330 kilovolts Benin transmission line axis, it cascaded into the loss of 414 Megawatts of electricity from the Ughelli plant.”

He noted that power generation dropped from the 5,300 Megawatts (MW) average in October 2021 to 4350MW in March.

Oseni said it was a dip by about 1000MW on the grid that denied some customers enough supply.