N110bn debt: Power crisis looms as Egbin threatens shutdown

There are strong indications that recent improvement in power sector may be short-lived as the management of Egbin Power threatened to shut down operations due to non-settlement of N100billion debt, inadequate gas supply and inefficiency in operations of the Transmission Company of Nigeria (TCN).

Speaking with energy correspondents in Lagos on Wednesday, the Managing Director/Chief Executive Officer (CEO), Egbin Power Plc, Mr Dallas Peavey Jr, stated that the 1320MW capacity plant is being forced to gradually shutdown due to adverse effect of grid instability that endangers its six turbines, inadequate gas supply to generate at optimal capacity as well as the huge debts owed the company by federal government through Nigerian Bulk Electricity Trading (NBET) and Market Operator.

According to him, “the effect of the N110billion has had worse effect on the company. We owe the gas companies, our technical partners (KEPCO) and most importantly our lenders, the banks. We have made massive investments in making the plant readily available to generate electricity sustainably but unfortunately, we can’t break even due to the gross inefficiency in the value chain.”

Furthermore, he argued that “The government guarantees to pay us for every megawatt we generate and sell to NBET but they have not done that. We just got paid for the month of December, 2016, three months later and we were only paid a paltry 28 per cent out of the total 100 per cent of the verified and accepted invoice for that month. That is how the outstanding debts kept accumulating for three and half years now.”

When asked about the effect of non-settlement of the debt, he said, “Eventually, these unbearable business operating circumstances and conditions will shut us down any moment if it persists. That is the simple but bitter truth.”

On inefficient TCN operations, he posited that, “We have reached 1,100MW while our installed capacity is 1,320 MW. But the (national) grid could not take the power because of the capability issues within the TCN system.  We are constrained and limited to generate about 350MW daily due to both TCN system operations and inadequate gas supply issues.

“So, 70 per cent of our output is lost because available power can’t be evacuated. When you get good news from TCN that you can increase your generation, we will be faced with insufficient gas and when there is gas, you have TCN issues to address. So, you have one, you don’t have the other.

“Let me be honest, if Egbin fails, it’s going to be dark as Egbin provides close to 30 per cent of Nigeria’s power, so let the required intervention be completed and urgently too, however, the Egbin turbines are ready to light up Nigeria.”

Egbin power plant is one of the biggest single power generating stations in Africa, with an installed capacity of 1320 MW consisting of six units of 220MW each.

Following the conclusion of the Government’s privatisation exercise in November 2013, the consortium formed by the partnership between New Electricity Distribution Company and the Korean Electric Power Corporation (NEDC/KEPCO) acquired Egbin Power plc.

Besides, an industry source who preferred anonymity to Tribune Online that federal government, through the ministries, departments and agencies (MDAs), is owing over $400billion debt to generation companies and the distribution companies.

He said the federal government can do better by ensuring that the military and other MDAs settle their electricity bills promptly because there is provision for such in their budget.