Gas Producers Cut Supply To Gencos Over N2.7trn Debt

Gas supply has been cut after the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) instructed gas producers to suspend supply of natural gas to indebted GenCos until further notice, citing the escalating debts.

This has led to a nationwide electricity blackout, severely impacting power generation across the country.

The Chief Executive Officer of the Association of Power Generation Companies, Dr Joy Ogaji, disclosed the latest development to Punch on Wednesday, stressing that the gas-producing companies have formally notified all GenCos of the suspension of natural gas supply.

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Currently, over 70 per cent of Nigeria’s power is produced by gas-fired power plants.

Earlier this year, Minister of Power, Adebayo Adelabu, disclosed that the Federal Government would start offsetting part of the debts it owes power generating companies and gas suppliers from April this year.

The minister, while on a working visit to Egbin Power Plc in the Ikorodu area of Lagos State, said he would liaise with the Central Bank of Nigeria to prioritise foreign exchange allocation to the power sector, saying this would boost the ability to ramp up capacity in terms of generating output.

“The Federal Government is now prioritising paying down on the outstanding debts, and I have assured the board and management that effective from April, we will start paying down on debts, as a form of incentive to continue to have them in operation,” he stated.

While the government has in the past few months paid N205bn of the debt owed to the GenCos, an ongoing disagreement between the NMDPRA and gas producers on who should collect the 0.5 per cent wholesale price levy imposed on petroleum products by the Petroleum Industry Act made the suppliers demand the payment of monies owed.

Speaking during the interview, APGC CEO Dr Ogaji stated that all relevant authorities, including the presidency, have been notified of the current situation and are awaiting the necessary interventions.

She added that debt, which hovered around N2tn earlier this year, has increased to N2.7tn.

She said, “It is no longer a matter of NMDPRA giving a directive. They have already stopped the supply of gas to power-generating companies.

“They (gas suppliers) have halted the supply. They have already informed our gencos that they are not going to be supplying gas anymore until what is outstanding is settled and it didn’t happen today.

“We have told the Nigerian Electricity Regulatory Commission, they are already aware of the situation. There is nobody who would say they are not aware; the minister is aware, and the presidency is aware.

“The total debt has now increased to over N2.7tn and you know that 70 per cent of thermal Gencos invoice is gas.

“They have been paying a small amount. So, when they pay us nine per cent, we just calculate nine per cent of our gas invoice and send it to the gas supplier because that is the only way to survive. We are all sharing in the poverty that NBET is giving us.”