GenCos tackle NBET over new administrative charge on gas payment

Electricity generating companies (GenCos) in Nigeria have rejected the new administrative charge of 0.75 per cent introduced by the Nigerian Bulk Electricity Trading Plc (NBET) on the cost of payment to gas suppliers.

NBET had recently written letters to thermal GenCos directing them to obtain their boards’ approvals transferring responsibility for payment of gas and transportation to the supply companies for an administrative charge of 0.75 per cent.

The letter, dated September 13, 2019, also gave each GenCo an ultimatum of three working days to respond with their board resolutions or face non-payment of energy invoices.

NBET had also claimed during a meeting with the GenCos that it secured Presidency’s directive to take over processing of gas payments on behalf of the GenCos and approval to apply 0.75 per cent as administrative charges or cost of payment to gas suppliers.

But the Association of Power Generation Companies (APGC) faulted NBET’s directive, saying the companies were unaware that such approvals have been issued by the Nigerian Electricity Regulatory Commission (NERC) and that there was any policy directive to that effect.

Executive Secretary of APGC, Joy Ogaji, told journalists in Abuja at the weekend that NBET was introducing the charges because it knew the GenCos have heard of the N600b Federal Government’s intervention fund.

She said the N600b fund was a short-term intervention to help the GenCos pay for energy generated and delivered while resolving issues faced by the Nigerian Electricity Supply Industry (NESI) sustainably.

Ogaji said to access the fund, “The GenCos are faced with bullish behaviour from an agency that is supposed to be an agent representing/protecting their interest.

“In previous situations, they were threatened and forced into signing various agreements such as Security Trust Deed and PPA Activation agreements or other documents, before they were paid for power generated and consumed.

“As if that was not enough, NBET is at it again, this time mandatorily issuing an arbitrary and unilateral decision, which should not be possible for a market licensee,” she added.

Explaining further, she disclosed that the administrative charge would be on each transaction, which means that each time the GenCos want to pay for gas suppliers, NBET would deduct 0.75 per cent administrative charge.

She noted that non-compliance with the directive would amount to non-payment of subsequent market invoices to GenCos, adding that stakeholders were not consulted to determine the viability of the new policy and that NBET could not introduce a cost in the electricity industry without NERC’s approval.

Besides, she argued that considering that GenCos were left with 15 per cent of their energy invoices to operate with a minimum revenue requirement of 20 to 30 per cent, an additional 0.75 per cent charge might force them out of business.