Power generation under threat as DISCOs owe Egbin Station N39bn

There are strong indications that the spate of blackout being experienced in some parts of the country, particularly in Lagos, Ogun and Oyo states may not be over soon.

This is because of the huge indebtedness totalling about N39 billion Electricity Distribution Companies, DISCOs, owe Egbin power station, one of the primary power generation companies in the country. The development, according to report, is already hampering the latter’s capacity to generate power.

The Egbin Power generation station had about a month ago announced for the first time, its peak generation capacity of 1,000 megawatts, following huge injection of capital and other critical resources by its private investors.

However, the capacity dropped by about 40 per cent three weeks later to 600mw due to shortage of gas supply.

Chairman of the company, Mr. Kola Adesina, yesterday confirmed the huge indebtedness owed the company from November 1, 2013, to date by the Discos. Adesina during a chat with journalists particularly lamented the huge debt burden, which he attributed to failure by government to seal the Power Purchase Agreement, PPA, with power Generation Companies, Gencos, nationwide.

He confirmed that his company had fulfilled all performance agreement entered into with government upon acquisition of the plant in November 2013.

Despite some challenges, he disclosed that the management was planning to raise the plant’s capacity by additional 1,350mw to hit 2,670mw by 2019.

Noting that about $1.3 million would be spent on the proposed expansion programme of the plant, the power generation investor recalled that the 1,100 mega watts capacity Egbin plant was in deplorable situation and generating about 500mw prior to its privatization.

“The plant before then did not undergo any major overhaul, the six units were not functional and in particular unit six was not working for 10 years. But to date, we have rehabilitated all units and currently generating 1,100mw,’’ he said.

He also disclosed that the company had embarked on feasibility study and Environmental Impact Assessment, EIA, to ascertain the feasibility of the expansion project, adding that the Front End Engineering, FEE, which is to put all in perspective with the Engineering Procurement Contract; EPC, has also been carried out.

Adesina said the management had significantly secured the facility to avert infringement by unauthorised persons.

“We now have in place new distribution control system of global standard, fire alarm detection system that was not in place earlier and have installed gas meter system to capture quantum of gas received.

We have also improved on our operational performance, but government is still owing us for electricity generated,’’ he lamented.

According to him, no matter how keen an investor may desire to transform the country, the necessary zeal will be lost when an investor doesn’t get paid for services rendered.

Recalling the forex exchange rate between the time the Egbin plant was acquired and now, the Genco’s chief pointed out that the exchange rate, which was N158 to a dollar when the plant was acquired, has gone up toN199.5 to a dollar.