The Nigerian Bulk Electricity Trading Plc (NBET) has in five years paid N240 billion to five power-generating companies (Gencos) for electricity not allegedly used by consumers, meaning the colossal amount was paid in exchange for darkness. Documents obtained by Huhuonline.com showed that the Gencos’ monthly bill was between N50 billion and N55 billion. “But this is expected to increase by about N10 billion with the change in the Central Bank of Nigeria (CBN) and the foreign exchange rate from N305 to N360,” one source noted.
Already, the huge amount paid between February 2015 and December 2019 by the organization is generating tension as inside sources in the power sector opposed to the ‘skewed clauses’ in the power purchase agreements, (PPAs) are already questioning the motive of those behind the deal. Currently, the NBET receives between N11 billion and N13 billion from the distribution companies (Discos) for the electricity they receive. This means that after each settlement monthly, the debt stock to NBET grows by about the difference between the invoices it receives from the Gencos and what it gets from the distribution companies.
Also allegedly being paid monthly are five of the 25 Gencos with PPAs with the NBET. At the end of payment last December, the NBET had paid approximately N240 billion for “electricity that was not delivered to Nigerians from February 2015 when it started processing settlements for the industry.”
For the other generation plants, Information gleaned from the documents showed that the NBET recognized their cost of electricity not delivered to Nigerians in its books for payment at a future date when the government is able to redeem its indebtedness.
“While that is awaited, NBET calculates and recognises interest on the unpaid portions of the invoices they receive each month from the generation companies. Although, the Nigerian Electricity Regulatory Commission, (NERC) has set a minimum payment for the distribution companies to pay to NBET, the devaluation of the naira which the CBN carries out has implications for the minimum payment each distribution company will pay to NBET. Being a financial institution of the Federal Ministry of Finance, Budget and National Planning mean that the treasury must provide for the monies NBET uses to operate as it is currently structured.
“The questions that need addressing include but not limited to how the repayment and funding of the growth in debt will be done. How will the Debt Management Office (DMO) provide for debt servicing. Will the DMO raise bonds to manage the debtor will it be done through appropriation, such that the DMO will make provision for the debt servicing for NBET through the monthly debt service obligations of the country?
“This relates to the cost the country will bear as a result of any additional power purchase agreements the Federal Government directs NBET to execute. Clearly, the additional electricity may not be evacuated since the country does not have adequate transmission and distribution lines to take the electricity from the new power plants down to the final consumers.”
He added: “The implication is that as a government and a country, contracts may be signed to pay for the electricity that the Federal Government knows it cannot deliver to Nigerians.”