Friday, January 18, 2019
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Invoice Padding: GenCos Fire Back At DisCos, Says You Are a Liar

The Executive Secretary, APGC, Dr. Joy Ogaji

…..Threatens To Take Matters Above

The Association of Power Generation Companies (APGC) has reacted to the allegation levelled against it by the Distribution Companies that the group connived with the Nigerian Bulk Electricity Trading (NBET) to perpetrate fraud by inflating the GENCOs monthly invoices, describing the allegation as not only mischievous, but ridiculous and distractive tactics by the DisCos aimed at downplaying the public sympathy for the GenCos, who she said had suffered accumulated debts to the tune of five hundred (N500bn) billion naira owed it by the DisCos.

In a press statement made available to our correspondent in the week, the Executive Secretary of the association, Dr. Joy Ogaji opined that the allegation is not only untrue but a fabricated sinister orchestrated by its distribution counterpart, the DisCos to whittling down the public perception against the DisCos’s manipulating tendencies in the electricity value chain, having failed to meet up with backlog of debts owed the GenCos.

She noted thus: “Relative to the news trending in the sector that Gencos are fraudulent and are conniving with NBET to inflate their monthly invoices, we wish to state here that we are not aware of any such practice, although we hold no brief for NBET whom we expect should respond to this allegation as soon as possible.

We are not sure what could have led to this allegation but since it is been perpetrated by the DisCos, they should make public the evidential proof of this allegation immediately, as it is said in law “He who asserts must prove”. This allegation will be escalated to the Honourable Minister of Power, Works and Housing, who as the leader of the sector is expected to intervene and deal with the issues as appropriate.”

It is a fact that GenCos, who are entitled to about 60% of invoiced energy bills, face the greatest risk in the electricity value chain with an outstanding unpaid invoice of over five hundred billion (N500bn) naira deserves 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.” She debunked.

On calls for the removal of capacity charges from GenCos payments, the ES GenCos continues:

We want to put on record that this call has been borne out of sheer ignorance of how the electricity market works. There is no place in the World where a generation company is paid only on energy.”

Projects will have to be privately financed, supported by non-recourse or limited recourse loans, with long-term agreements financed by the Electricity Market. Capacity payment are needed in order to guarantee energy supplies and to keep the prices as low as possible. Without a capacity payment system, new investments in power plants will come to a standstill. It incentivises the Gencos to make capacity available when it is needed most.”

Amongst other things, the MYTO is based on benchmarks on projections of available capacity of energy to be sold in the market; the cost of gas and other feedstock; and the prediction of inflation and foreign exchange. The MYTO tariff methodology was developed in consultation with industry stakeholders, labour groups and consumer groups. MYTO is supposed to provide a correct pricing of electricity, taking into consideration the key principles of cost reflectivity, affordability of electricity tariffs, and incentives for efficient operations.”

The MYTO methodology sets tariffs for the key electricity sectors players, namely – Generation, Transmission and Distribution, based on certain key assumptions and inputs. Generation companies are paid based on their negotiated Power Purchase Agreements (PPA) and hence are not unilaterally determined. All negotiated PPAs are approved by NERC after ensuring that such cost is prudently incurred before it is sent to NBET to make payments.” She said.

Intimating the general public of the true working scenario of the electricity values chain as regards invoicing and terms of payments, Dr. Joy Ogaji concluded thus:

We make bold to state here that, contrary to the allegation by the DisCos of inflated GenCo invoices in cohorts with NBET, no sector participant has any overriding powers to negotiate inflated invoice payments.”

We also expect that only adequately researched and verified information be published by players in the sector and not propagandist and misleading information which we believe are distractive tactics. GenCos take exception to being used as a weapon for such dirty politics.” The statement reads.

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Sola Omosola Akingboye
Sola Omosola Akingboye
Sola Omosola Akingboye graduated from Lagos State University, Ojo and also an alumni of International Institute of Journalism, Abuja. The Abuja based Media Consult is a member of NUJ, FCT Chapel; Member, Nig Energy Correspondents and affiliate of other proffesional bodies such as Believe in Nigeria Initiative (BINI); Change Agent for Positive Transformation (CAPT); OSHA Association for Industrial Safety in Nigeria. He is currently an Associate Editor and Chairman Editorial Board