Electricity Generating Companies (GENCOs), have challenged distribution companies, DISCOs, to defend their allegation that GENCOs were infl ating invoices and engaging in fraud. Th e Association of Power Generation Companies (APGC), which is the umbrella body of electricity producing companies, on Monday challenged the accusers to come up with evidence. Th e response followed an allegation, last Th ursday by the Director of Research & Advocacy of the Association of Nigerian Electricity Distributors (ANED), Sunday Oduntan, who said lack of transparency between GENCOs and the Nigerian Bulk Electricity Trader, NBET, was part of the problems the electricity industry was facing. NBET is a Federal Government company incorporated under the Electric Power Sector Reform Act, 2005, to buy electricity in bulk from GENCOs for resale to DISCOs. Mr. Oduntan said the association’s allegation of lack of transparency was based on “infl ated invoices” presented by GENCOs to NBET for settlement in respect of capacity charges included as part of the costs paid by DISCOs. “Th e volume of energy consumed should be higher than the capacity charged. But, what is obtained is the other way round. Manipulating invoices is not acceptable. It’s time to say enough is enough.
“Th e capacity charge by GENCOs is higher than the price of the energy sold to DISCOs. It’s time the government looked at the issue. Between GENCOs and NBET, we need to see transparency. Th ey should open their books and let everybody see what is there. Enough of this fraud,” Mr. Oduntan said during the briefi ng. But, in her reaction, the Executive Secretary, APGC, Joy Ogaji, in a response to PREMIUM TIMES’ enquiries, denied knowledge of the allegation by ANED, describing it as “display of pure ignorance of how the electricity market works.” Mrs. Ogaji challenged ANED to immediately make public the evidence to prove its allegation, urging the group to extend same to the Minister of Power, Works and Housing, as the leader of the sector.
“It is a fact that GENCOs, which are entitled to about 60 per cent of invoiced energy bills, face the greatest risk in the electricity value chain, with an outstanding unpaid invoice of over N500 billion. Th ey deserve pity, rather than ridicule. “Trying to smear our image with such baseless and unfounded allegations is not only unfair, but misleading to the Nigerian populace, giving the impression that the sector is not regulated, and that market participants can do as they please,” Mrs. Ogaji said in a statement.
She said the call for the removal of capacity charge from DISCOs payments was borne out of sheer ignorance of how the electricity market works, arguing that there was no place in the world where a GENCO was paid only on energy. Apart from projects being privately fi nanced, the APGC offi cial said the same would be supported by nonrecourse or limited recourse loans, with long-term agreements fi nanced by the electricity market. She explained that capacity charge payment was therefore needed to guarantee energy supplies and keep the prices as low as possible, without which new investments in power plants would come to a standstill.
