Gencos: Discos Arbitrarily Determine Nigerians’ Access to Power

By Chineme Okafor in Abuja

Power generation companies (Gencos) in Nigeria’s power market Wednesday said that the 11 electricity distribution companies (Discos) in the market now arbitrarily determine how much electricity Nigerians can enjoy every day, as against how much they (Gencos) can generate and put on the grid for distribution.

The Gencos said this practice was against the rules guiding operations in the country’s electricity market, but that the Discos indulge in it with the knowledge of the regulator – the Nigerian Electricity Regulatory Commission (NERC).

Responding to a recent claim by the Discos that the Gencos have only been able to put an average of 3,453 megawatts (MW) on the national grid since 2013 when the power market privatisation happened, the Gencos said through their association – the Association of Power Generating Companies (APGC), that the NERC had in connivance with the Discos included in the Transition Electricity Market (TEM) Supplementary Order of 2015, terms that limited the volume of electricity they can put on the grid and be paid for.

The response of the Gencos was contained in a note the Executive Secretary of APGC, Dr. Joy Ogaji, exchanged with THISDAY in Abuja. In it, the Gencos claimed the reduction in their billable generation capacity was instigated by the Discos and approved by the NERC.

They further explained the practice meant that the Discos determined what the power system could take and not what Gencos are willing and available to sell, adding that NERC went on to direct that metered energy be converted into capacity for billing.

“This regulatory directive, on a monthly basis, brings down the actual billable mobilised Gencos capacity, leading to the Discos billed less. It is believed that this reduction of capacity during billing was instigated by the Discos and the regulator approved of it.

“The current state of the market, where a generation company is short-changed for the benefit of other market participant negates the tenets of the Multi-Year Tariff Order (MYTO),” said the Gencos.

They noted: “The result of the foregoing is that Gencos have not been receiving full payment for the electricity supplied by them, while the gas suppliers have also not been receiving full payments for gas supplied to the Gencos.

“This has accounted for the sub-optimal growth, inefficient operation and the current dire situation of the Gencos, which has huge negative impact on the entire power sector. The current NESI completely negates the tenets of the MYTO as a model to incentivise prudent operators.”

According to them, “In summary, the current tariff is calculated for the Discos based on the actual generation, meaning what each Disco actually receive on monthly bases as dictated by themselves in line with their load rejection and allowed by the regulator (this can be verified from NERC).

“This clearly implies that the power on the grid is determined purely by what the Discos decide to take and not what is declared as available to be supplied by the Gencos or documented by the System Operator.

“If this is the case, we do not see how the Discos whose abysmal performance is responsible for the state of the market cries wolf and foul. It is akin to the story of the millipede and the person who stepped on the millipede. The NESI should move past this attention-seeking behaviour to a reality and solution-seeking mode.”