N2.7tn debt: FG intervention halts gas supply cut

Power generation rose to a high of 3,624.34 megawatts on Thursday following the restoration of the national grid by engineers of the Transmission Company of Nigeria after the grid collapsed the preceding day.

It was also gathered that the Federal Government had to intervene in tackling gas supply to generation companies after suppliers of the product reportedly halted gas supply to Gencos due to a debt of about N2.7tn.

The PUNCH reported on Thursday that wholesale gas-producing companies had abruptly stopped the supply of natural gas to power generation companies for electricity production over the non-payment of debts accrued from previous supplies.

It was also reported that Nigerians were plunged into darkness on Wednesday following another collapse of the national power grid. Wednesday’s collapse was the 12th time the grid would collapse in the year.

The grid went off at about 1:36 pm on Wednesday. It was observed that power generation was 0.00 megawatts as of 2 pm on Wednesday.

However, on Thursday, data obtained from TCN indicated that the grid had been restored, as power generation rose to 2,412.89MW around 1 am.

It climbed to a peak of 3,624.34MW around 7 pm on Thursday, indicating that gas suppliers had either delayed or suspended their threat of halting gas supply to electricity generation companies.

Nigeria generates an average of 4,500MW of electricity. About 70 per cent of this quantum of energy is produced by gas-fired power plants. A halt in gas supply by producers would mean a crash in power generation and a massive blackout nationwide.

Senior officials at the Federal Ministry of Power stated that the Federal Government would not allow gas suppliers to throw the nation into widespread blackout by cutting off supply.

They stated that the government had to intervene by tackling the gas supply issues, a development that ensured the restoration of the grid and the generation of over 3,500MW of electricity on Thursday.

“The government cannot allow the gas supply to be cut off,” a senior official at the FMP, who spoke to our correspondent in confidence due to lack of authorisation to speak on the matter, stated.

Another source at the ministry said, “Over 70 per cent of Nigeria’s power plants are fired by gas, so how do you think the gas suppliers will stop the supply of gas to Gencos and the government will allow it? The government is tackling the issue, that is what I can tell you now.”

Insiders believe that the government will intervene by settling some of the gas debts as it has always done, but not by necessarily meeting the gas producers.

The Chief Executive Officer of the Association of Power Generation Companies, Dr Joy Ogaji, had told The PUNCH on Wednesday that gas suppliers had halted supply to Gencos.

“They (gas suppliers) have halted the supply. They have already informed our gencos that they are not going to be supplying gas anymore until what is outstanding is settled and it didn’t happen today.

“We have told the Nigerian Electricity Regulatory Commission, they are already aware of the situation. There is nobody who would say they are not aware; the minister is aware, and the presidency is aware.

“The total debt has now increased to over N2.7tn and you know that 70 per cent of thermal Gencos invoice is gas.

“They have been paying a small amount. So, when they pay us nine per cent, we just calculate nine per cent of our gas invoice and send it to the gas supplier because that is the only way to survive. We are all sharing in the poverty that NBET is giving us,” she stated.

Earlier this year, Minister of Power, Adebayo Adelabu, disclosed that the Federal Government would start offsetting part of the debts it owes power generating companies and gas suppliers from April this year.

The minister, while on a working visit to Egbin Power Plc in the Ikorodu area of Lagos State, said he would liaise with the Central Bank of Nigeria to prioritise foreign exchange allocation to the power sector, saying this would boost the ability to ramp up capacity in terms of generating output.

“The Federal Government is now prioritising paying down on the outstanding debts, and I have assured the board and management that effective from April, we will start paying down on debts, as a form of incentive to continue to have them in operation,” he stated.