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According to new information obtained by The PUNCH, wholesale gas producers have unexpectedly ceased providing natural gas to power generation firms for the creation of electricity due to the non-payment of debts incurred from prior supplies.
In an exclusive interview with The PUNCH on Wednesday, Dr. Joy Ogaji, the CEO of the Association of Power Generation businesses, revealed the most recent development and emphasized that the gas-producing businesses have officially informed all GenCos of the suspension of natural gas delivery.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority reportedly ordered gas producers to halt natural gas deliveries to indebted GenCos until further notice due to the growing arrears, which resulted in an abrupt stop to the gas supply.
Power generation across the nation has been negatively impacted by the scenario, which has resulted in a nationwide electricity blackout.
Currently, gas-fired power plants generate more than 70% of Nigeria’s electricity.
The Federal Government will begin offsetting a portion of its obligations to gas suppliers and electricity generating businesses in April of this year, according to information released earlier this year by Adebayo Adelabu, Minister of electricity.
During a working visit to Egbin Power Plc in Lagos State’s Ikorodu neighborhood, the minister stated that he would coordinate with the Central Bank of Nigeria to give the power industry priority when it comes to foreign exchange allocation. He claimed that this would increase the capability to increase output generation.
As an incentive to keep them operating, he said, “The Federal Government is now prioritizing paying down the outstanding debts, and I have assured the board and management that effective from April, we will start paying down on debts.”
Even though the government has paid N205 billion of the debt owed to the GenCos in recent months, the suppliers demanded payment because of a continuing dispute between the NMDPRA and gas producers over who should be responsible for collecting the 0.5% wholesale price levy imposed on petroleum products by the Petroleum Industry Act.
Dr. Ogaji, the CEO of APGC, said in the interview that the presidency and all other pertinent authorities have been informed of the current state of affairs and are awaiting the required actions.
She also mentioned that the amount of debt has grown to N2.7 trillion from about N2 trillion earlier this year.
“NMDPRA is no longer in the position of issuing a directive,” she stated. The gas supply to firms that generate electricity has already been cut off.
“The supply has been stopped by them (gas suppliers).” They have already told our gencos that they will stop providing gas until the due balance is paid, which did not happen today.
The Nigerian Electricity Regulatory Commission is already aware of the matter, as we have informed them. No one would claim that they are already conscious of the circumstances. No one would deny their knowledge; both the presidency and the minister are aware.
“As you are aware, 70% of Thermal Genco’s invoice is for gas, and the total debt has now risen to over N2.7 trillion.”
They have been making modest payments. The only way we can live is to compute nine percent of our gas invoice and send it to the gas supplier when they pay us nine percent. The poverty that NBET is causing us is something that we all share.
Due to the disruption caused by the supply suspension, worries about energy shortages and operational instability are spreading across the country.
Nigerians were already in the dark on Wednesday when the country’s electrical grid collapsed once more.
The grid would fail for the twelfth time this year.
According to our source, the grid went down Wednesday afternoon at approximately 1:36 p.m.
As of 2:00 pm, power generation was recorded at 0.00 megawatts.
Nigerians reacted when the system broke three times in a single week in October, causing blackouts.
At around 2:09 p.m. on Wednesday, the grid crashed, according to a tweet sent from Nigeria’s National Grid’s official account.
The tweet said, “The major grid setback has occurred and the restoration is to begin.”
Distribution firms confirmed the occurrence and informed their consumers in various notices that the outage was caused by the grid collapsing.
“We hope to restore normal power supply to our esteemed customers as soon as the grid supply is restored to normalcy.” Jos Disco said in a statement signed by Friday Elijah, Head, Corporate Communications, that the current outage being experienced within our franchise states is due to a loss of power supply from the national grid. The loss of power supply from the national grid occurred this afternoon at about 1333 hours of today, Wednesday, 11th December 2024, hence the loss of power supply on all our feeders.
In a similar vein, the Abuja Distribution company said, “We wish to inform you that a system disturbance occurred on the national grid at 1:32 pm today (Wednesday) causing a power outage across our franchise areas. While gradual restoration of power supply has begun, be assured that we are coordinating closely with relevant stakeholders to restore power fully as soon as the grid is stabilized.” In response, Nigeria Consumer Protection Network President Kunle Olubiyo called for an independent forensic audit of the debt claims made by gas-producing companies, stating that the outstanding amount does not correspond with actual conditions in the industry.
He also encouraged the government to stop using the power industry as a scapegoat for the shortcomings of its participants and to fully privatize it.
“We need to thoroughly investigate these claims; after they are examined, audited, and validated, we can see what is happening in the industry,” Olubiyo told The PUNCH. It’s a market for buying and selling.
“We should have the same model that is being used at Azura for every Gencos abinitio. Financial tools like letters of credit were made available when the government promised to privatize the power industry (both upstream and downstream) in order to assist in the event that the norms and obligations of the market were not followed. Players in the industry cut them off and opted to purchase goods on credit without a repayment plan, even though the letter rule could have been utilized to establish some degree of discipline. In order to invoke the penalty clauses and instruments in the event of violations, the market should be managed similarly to a corporation. There must be penalties if you pledge a sum of money that could result in the sector’s demise.
In the value chain, the discos are acquiring supplies without any kind of collateralization. It is not carried out anyplace. The industry is only benefiting from the goodwill of a select few well-known and financially stable individuals. However, this goodwill has also been overdrawn, therefore it is in our best interests to confront the truth as soon as possible. “If we do proper follow-up and forensic checks, I’m sure we’ll find out that seventy-five percent of the bill we’ve been paying on federal government subsidies is funded by the public sector, just like the oil sector; nobody would want to reveal what has been over-bloated in the past,” he continued. Because we are unable to identify the claims made by both parties as synergized corruption, which is typically bloated, the worry is that the ongoing jumble of public and private sector models is creating space for corruption.
There’s a chance that some of these classes are exaggerated. Corruption is growing as a result of the governor’s continuous equity in the electricity industry. The burden of problems in any industry should not fall on the government because some people would take advantage of it and start to enrich themselves. To bridge the gap, the government ought to abandon the power industry and focus on the underprivileged and unreached.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority, meantime, has denied issuing any orders to cut off gas supplies to the companies that generate electricity.
“The NMDPRA has been alerted to a news article that falsely claims the Authority has ordered the suspension of gas supply to GENCOs and directed wholesale gas suppliers to cease further gas supply to companies due to nonpayment obligations,” the statement, which was signed by its Public Affairs Unit, stated.
The NMDPRA would want to make it clear that this report is untrue and wholly unjustified.
It has an impact on the data presented at a recent stakeholders’ meeting involving the Authority, the OPTS, IPPG, and other oil and gas industry participants that was held in Lagos.
“To sensitize stakeholders on the requirements, opportunities, and benefits associated with the implementation of wholesale supply license as provided by sections 142 and 197 of the Petroleum Industry Act 2021,” the statement continued, the meeting was organized. It was a sequel to a previous stakeholder meeting that took place on November 27, 2024, at the NMDPRA corporate headquarters in Abuja.
Since every attempt is being made to guarantee that the supply and distribution of natural gas and petroleum products to end users is smooth and uninterrupted as we enter the holiday season and, in fact, throughout the entire upcoming year 2025, the Authority would like to reassure all of our stakeholders and the general public that the false statement was never made at that event or anywhere else. They are encouraged to completely disregard the publication.
