Economy

Power generation coys decry 0.75 per cent administrative charge

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The Association of Power Generation Companies(APGC) says the 0.75 per cent administrative charge on gas and transportation imposed on thermal generation companies will add additional burden to their operations.

Mrs Joy Ogaji, the Executive Secretary of APGC, made this known in a statement issued in Abuja on Sunday.

She said the Nigeria Bulk Electricity Trading Company (NBET) on Sept. 13 issued a letter to thermal generating companies directing them to obtain board approvals or resolutions for payment of 0.75 percent administrative charge on gas and transportation.

Ogaji said NBET gave the generating companies three working days ultimatum between Sept. 13 and Sept. 18 to respond to the board resolution or face non-payment of energy invoices.

She noted that NBET like other market participants is a licensee of Nigerian Electricity Regulatory Commission (NERC).

“As such, it is expected to understand that in a regulated market, every expense/cost must be backed by 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 per cent  “administrative charge” on GenCos who are already convulsing, in the Nigeria Electricity Supply Industry (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,” Ogaji said.

She said that a generating company required between 20  and 30 per cent  of its total revenue to meet the direct operating cost of keeping the plants running on a monthly basis, gas exclusive,

She said that if NBET’s directive on pro-rata payments was carried out, the six per cent that would be left for the generating companies would not cater for staff costs.

According to her, generating companies will not also have the resources to procure basic spare parts that the machines require to keep them in operation.

She said during a meeting between the NBET management and the generating companies, NBET claimed that it was directed by the Presidency to take over the  processing of gas payment on behalf of the GenCos

Ogaji said that NBET at the meeting claimed it had approval to apply 0.75 per cent  as administrative charges or cost on payment to gas suppliers.

“The said 0.75 per cent administrative charge is compulsory as it is a Condition Precedent (CP) for GenCos to access the N600billion the Federal Government has approved for immediate payment to gas suppliers and GenCos.

“Introducing an additional burden of 0.75 per cent  to GenCos gas invoices payments implies that NBET is looking to rake in a windfall of not less than N2.7 billion as its administrative fees.

“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.

Efforts by the Nigeria News Agency to reach NBET Managing Director, Dr Marilyn Amobi, for her comments proved abortive as her line was not going through.

A text message also sent to her was not responded to.
COA/OYE/OJO

(Edited by Celine-Damilola Oyewole/Mufutau Ojo)

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