THE Managing Director of Power Generating Companies of Nigeria (APGC), Joy Ogaji, has advised Nigeria to learn from Ghana’s structured payment for its gas-generating companies.
She said the model would help Nigeria’s Electricity Supply Industry (NESI) to prioritise payment to gas general companies, which would lead to improvement of power supply.
Ogaji advised in an exclusive interview with The ICIR.
The ICIR reports that gas generation companies in Nigeria are currently owed by the Federal Government, which has worsened liquidity problems in Nigeria’s electricity sector.
The Association of Power Generation Companies (APGC), the umbrella body for the gas companies, had occasionally declared “force majeure” to press home their payment demands.
The Generation Companies (GENCO)’s leadership confirmed to The ICIR that the government owed them N5.6 trillion in debt, a situation that has widened the debt crisis in Nigeria’s power sector.
“In Ghana, there is a cash waterfall mechanism, where monetary revenue from power sales is supposed to be lodged. In 2024, Independent Power Producer (IPPs) and West African Gas Pipeline Company Limited (WAPCo) protested, and the government decided to prioritise payment to IPPs/WAPCo-gas transporter. The result of this decision is that power is stable in their country, “the Managing Director of Power Generating Companies of Nigeria (APGC), Joy Ogaji, told The ICIR.
Commenting further on the sustainable financial model for Nigeria’s power sector problems, Ogaji stressed the importance of oversight among the Distribution Companies (DisCos), noting that the Federal Government’s substantial shareholding in all the DisCos should facilitate effective oversight.
“The Federal Government has a substantial shareholding in all the DisCos. Hence, it is expected to have a significant level of oversight on the activities of the DisCos. The regulator is, by status, required to monitor the performance of all participants in the electricity market, including the DisCos,” she added.
She noted that the Central Bank of Nigeria (CBN) was exposed to the market through the funding facility it recently extended to the DisCos.
“It is a no-brainer that the CBN will be interested in making sure that this facility is managed efficiently, especially ensuring that the repayment mechanisms remain sacrosanct, “she stated.
She further argued that the underpayment by the DisCos led to mounting debts owed to the GenCos and, by extension, the gas producers.
“Every month, the GENCOs’ invoice ends up in an average of N280 billion of power that is taken, not what they can generate. It is a huge problem. As of December 2024, the debt owed to us was N4 trillion, and that was the subject of our meeting with Mr President. This is why we appeal for this payment, and this is not a subsidy; it’s for power consumed,” she added.
The ICIR reported that the Federal Government promised to sort out the outstanding N4 trillion debt payment in two ways: part of it in cash, and the rest through promissory notes, which are legal documents that act as a promise to pay money at a later date.
Findings have also shown that Nigeria’s power sector has relied on interventionist funds from the World Bank and the African Development Bank (AfDB) to pull itself out of various liquidity crises, since the sector’s privatisation in 2013.
There are several instances of World Bank support for the sector, including a $500 million loan in 2021 for the Nigeria Distribution Sector Recovery Program (DISREP), a $750 million facility approved in 2023 for the Power Sector Recovery Operation (PSRO) and Distributed Access through a Renewable Energy Scale-Up (DARES), and pledged support with 1.2 million meters in 2023 to address the metering gap.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.