The association of power generation companies of Nigeria has debunked claims by Nigeria Bulk Electricity Trading (NBET) plc, that its members have been recovering over 80% invoice settlement since 2018.
It also advised the Federal Government-owned agency to stop living in self-denial and play its role as the buffer, obligor and credit-worthy off-taker and not to continue the accumulation of liability.
The association which was responding to the statement credited to NBET to the effect that it makes payment to GenCos as at when due and has never defaulted on any payment cycle till date, stated that NBET never said anything about the payment details of it members from 2015 till 2017.
Also, on the claim by NBET that the percentage payment made to GENCOS has continually been on the increase, with the N701.9 billion PAF payment which ensured a minimum of 80% of GenCos invoices for the year 2018 and 2019, as well as the 2nd PAF of N600 billion that ensured an average of 95% payment of GenCos invoices for 2020.
The association in a press statement on Wednesday debunked this claim, saying that it is devoid of the true picture of the realities of the generation companies in the NESI, and therefore, capable of misleading the numerous consumers and stakeholders who deserve to know the truth.
“This is because, a perusal of their response shows that NBET never said anything about their payment details, from 2015 till 2017. We also believe that NBET is deliberately redirecting the focus from its inability to carry out its obligations which have thrown the GenCos in a financial quagmire, by focusing its insistence on the payments from the PAF.”
“It is imperative to state that the PAF payments were never envisioned in the PPAs. However, due to the bulk trader’s inability to fulfill its payment obligations, the PAFs were introduced as interventions by the Federal Government. Nevertheless, these interventions neither fully settled (dual involve of capacity and energy) the GenCos’ invoices nor settled the historical debts.”
“NBET has also claimed that on the issue of capacity payments only GenCos with active PPAs get full capacity payment based on their active gas contracts. What it failed to disclose is that even though the PPA is active vide the PPA Activation agreement executed by the majority of the GenCos; it has failed to be bound by the terms of this provision. The breach on the part of NBET by the chronic and persistent shortfalls in payments has resulted in a dispute between both parties.”
It stated that even in the placeholder called security trust deed (STD), there is no provision in the STD that excludes NBET from performing its obligations under Clause 12 of the PPA as NBET remains the primary obligor. But Contrary to NBET’s payment claim, one thing is certain, NBET cannot rightly claim that the GenCos are recovering over 80% invoice settlement since 2018, stating further that It is imperative to state that even the GenCos with “active PPA’s” cannot boast of such efficient payment.
The claims of NBET association stated to have a way of destroying the market by deceiving the government to believe that all is going on well when in fact there is a serious rot.
NBET should be bold enough to admit its inability to meet its obligation so the FGN can design relevant instruments to salvage the system. It is a pity that NBET will term the legacy GenCos PPA as ineffective when the CPs for the contract to be effective are within NBET’s purview, the association said.
“This, therefore, raises a key question: Has NBET ever fulfilled its 100% payment obligation to the GenCos? How does NBET expect the GenCos to make their PPA’s effective? What makes a PPA effective? What is the role of the PPA activation agreement and Security trust deed? Are they placeholders or smokescreen? It claimed that it has never defaulted in its payment cycle, interesting. However, as lawyers will say, he who comes to equity must come with clean hands, NBET please publish your evidence of full payment as former management did on the company website”