Gencos Allege N1.7tn Funding Shortfall

•We offered to return our licences twice, say Discos

Ejiofor Alike

The electricity generation companies (Gencos) yesterday raised the alarm over the federal government’s failure to make plans on how to fund the N1.7 trillion shortfall in either the annual budget or in the 2015 Multi Year Tariff Order (MYTO) and blamed the Nigerian Electricity Regulatory Commission (NERC) for the funding gap.

Electricity distribution companies (Discos) also said they had offered to return their licences to the federal government on two different occasions but the government rejected the offers.

In a statement issued yesterday under the umbrella of Association of Power Generation Companies (APGC), the Executive Director, Mrs. Joy Ogaji, urged the federal government to mention its funding initiative for the shortfall.

The spokesperson of the GenCos said: “Generation companies have raised concerns regarding the tariff review, scheduled to be effective on the 1st of April, 2020. The Gencos’ concerns relate to the fact that NERC has not captured all the ‘changes’ in the relevant macroeconomic variables and available generation capacity in updating the operating MYTO-2015 in line with the provisions of the MYTO Methodology.

“The seeming gaps are shown through the four parameters considered in the minor review namely: inflation, interest rates, exchange rates and generation capacity as it affects or impacts our business.

“Dealing with market shortfall holistically, we are concerned about the financing of the shortfalls, given that there is no provision in the 2019 or 2020 budget. What is the PSRP financing initiative?
“What is not clear is who will take charge of the financing plan. Do these plans and facilities even exist? If so, what are the terms under which they were created, if not in existence, right now, who is working to create them and when would they be ready?”
Ogaji urged the NERC to explain how it arrived at the MYTO review that refused to capture the shortfalls in the sector.
She was worried about the inequitable manner of the remittances requirements of the review tariff order.

According to her, whereas the tariff review makes provision for Gencos to receive 36 per cent of their revenue requirement, the Discos are to receive 100 per cent of theirs.
She also asked the commission to address the issue of previous failed reviews and state how to make a difference in the current review.
Meanwhile, the Discos have said they had offered to return their licences to the federal government on two different occasions.

The Executive Director of Research and Advocacy of the Association of Nigerian Electricity Distributors (ANED), Mr. Sunday Oduntan, told ARISE News Channel, THISDAY sister broadcast arm, in an interview yesterday that the federal government refused the offer on both occasions.

“We believe that as long as the government or regulator do the right thing that is consistent with the wordings and tenets of the agreement signed with the private investors, they are free to take any action as long as the rule of law is observed.

“As far as we are concerned, we have taken our licences to them before, two times, one during the tenure of Jonathan. We said thank you for selling to us; take we are no more interested. It is called force majeure in law. Give us our money back. They said no; we are not taking it from you. They gave it back to us that we should keep on running it.

“During Buhari’s time, we said we are no more interested. They said no. For us to have filed force majeure tells you we are not a desperate set of people. All their concern is to be able to recover their costs. What we all want is electricity.”