“Debt Drains Nigerian Power Sector: Plant Capacity Falls Despite 12,249MW”

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Despite having 27 power plants connected to the National Grid with a combined installed capacity of 12,249 Megawatts, mounting debt totaling N1.3 trillion has severely impacted the operational capacity of generation companies (GenCos).

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According to the latest data from the Nigerian Electricity Regulatory Commission (NERC), GenCos’ plant availability capacity plummeted to just 34.66 percent or 4,251.81MW in the first quarter of 2024, marking a 7.7 percent decline compared to the same period last year when it stood at 4,605.72MW.

The data reveals fluctuations in plant availability throughout the quarter, with January recording 37 percent (4,459.41MW), followed by a drop in February to 32 percent (3,957.16MW), and a marginal improvement in March to 35 percent (4,338.88MW).

The precarious state of the power sector is further highlighted by the actual energy generated to the national grid, which remains insufficient. In January, February, and March 2024, the grid recorded 3,180.45GWh, 2,642.09GWh, and 3,084.02GWh, respectively.

GenCos attribute the decline in plant capacity availability to poor payments from the Nigerian Bulk Electricity Trading Plc (NBET), resulting in the accumulation of significant debts. The situation has been exacerbated by regulatory measures that prioritize market payments to other participants, as stated in a position paper presented to the Senate Committee on Power.

The GenCos stress the critical importance of capacity payments in sustaining their operations and meeting financial obligations. They call for urgent action to address outstanding debts and ensure full and timely payments from NBET.

Energy market expert, Mr. Lanre Elatuyi, underscores the impact of poor liquidity on plant availability capacity, citing mechanical faults, gas constraints, and inadequate maintenance as contributing factors. He casts doubt on the feasibility of the Minister of Power’s ambitious plan to increase generation to 6,000MW by the end of the year, emphasizing the need for substantial investment and systemic improvements across the sector.


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