GenCos threaten force majeure over NBET’s ‘bullying, extortionist’ policy

September 23rd, 2019

By Obas Esiedesa

The crisis of confidence rocking the Nigerian Electricity Supply Industry is set to take a further dip as power generation companies in Nigeria have threatened to declare force majeure over what they describe as bullying policies by the Nigeria Electricity Bulk Trading Company (NBET).

NBET is a Federal Government owned company established as a credit off taker for the power sector that guarantees generation companies and gas suppliers of payments in the Nigerian Electricity Supply Industry.

The power generation companies are unhappy over a new directive from NBET ordering thermal power plant owners in the country to transfer the responsibility of paying gas suppliers to the bulk trader for an administrative charge of 0.75 percent.

But kicking against the directives, the GenCos speaking under the aegis if Association of Power Generation Companies (APGC) said the policy was illegal.

APGC Executive Secretary, Dr. Joy Ogaji told journalists in Abuja at the weekend that NBET as a licensee lacked the power to issue such directive, describing it as bullying and extortionist.

Mrs. Ogaji explained that it was impossible for the GenCos to survive under such policies if the NBET directive was allowed to stand.

According to her, “NBET, on 13th September 2019 issued a letter to individual thermal GenCos directing them to obtain, as a matter of urgency, their respective board approvals or resolutions, bequeathing responsibility for payment of gas and transportation to the respective supply companies for an administrative charge of 0.75%.

“The letter gave each GenCo three (3) working days ultimatum to respond with the board resolution i.e. September 18, 2019 or face non-payment of energy invoices.

“It should be noted that NBET like other market participants, is a licensee of NERC and as such is expected to understand that in a regulated market, every expense/cost must be backed by a regulatory approval for effective computation of the market tariffs

“The generation companies are not aware that such approvals have been issued by NERC nor is there any policy directive to this effect.

“The fact that NBET is placing the extortionist 0.75% ‘administrative charge’ on GenCos who are already convulsing, in the NESI is an aberration on the duty of care placed on NBET.

“In addition, going by the principle of privity of contracts, Thermal GenCos have contractual obligations to pay their gas suppliers. If they do not pay, that burden remains with them”, she explained.

She described NBET directive as unilateral as no consultations took place, as required for all major decisions affecting the electricity market.

Mrs. Ogaji stated that NBET was targeting the planned N600 billion from the Federal Government to help the market in meeting its obligations especially to gas suppliers.

She stressed that “If NBET gets its way in executing its planned action, it will set in motion a significant precedent that any entity can take up the role of a regulator in the NESI, giving directive without the relevant stakeholder engagement and regulatory (NERC) approval”.

She added: “Unfortunately, as it stands, the relationship between the GenCos and other markets participants and agencies of government is progressively becoming a master-slave or master-servant relationship. GenCos being the slaves or servants.

“It is unfathomable that any ongoing concern gets paid only 15% of its invoices and yet expected to perform within the requirement of the performance and other relevant market agreements entered into.

“The time may just be right for GenCos to declare force majeure and release themselves of all market obligations”.

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