The Association of Power Generation Companies has attributed Nigeria’s stagnant electricity generation, which has averaged about 4,000 megawatts for years, to inadequate risk protection for power companies, including plants under the National Integrated Power Projects.
APGC Chief Executive Officer, Joy Ogaji, made this known in a press statement titled, “The GenCos dilemma: A clarification on capacity payments, PPAs, and market realities.”
She said legacy GenCos and NIPP plants have been operating without sufficient sector risk protection and are exposed to operational and regulatory risks.
“From the foregoing, the legacy GenCos and the NIPP plants in the market have been operating without adequate sector risk protection, hence exposed to various operational and regulatory risks.
“This singular reason has kept the sector at about 4,000MW of average grid generation for many years, notwithstanding an installed capacity of 15,500MW,” Ogaji stated.
According to her, claims by Nigerian Bulk Electricity Trading that only five active Power Purchase Agreements exist suggest that most power plants are operating without valid PPAs.
Ogaji described the situation as alarming for investors, noting that the absence of PPAs provides no guarantee of returns on investment.
She added that without active PPAs, it is difficult for power plants to secure Gas Supply Agreements, as there is no financial backstop to support such arrangements.
The APGC boss further explained that GenCos face exposure to downstream inefficiencies in the electricity market. She said when the transmission company is unable to wheel power effectively, load rejection occurs, leaving generation capacity idle.
Similarly, she noted that when distribution companies fail to distribute available power efficiently, load rejection also occurs.
Ogaji stressed that GenCos are further affected when distribution companies are unable to collect revenue for energy supplied, leading to payment shortfalls for electricity generated and delivered.
