The chairman of Egbin Power Plc, Mr. Kola Adesina, on Monday raised the alarm that a debt of N39 billion owed by the Federal Government to the Egbin Power Station for the power it generated into the national grid since November 1, 2013 to date has created liquidity crisis that is hampering optimal operation of the plant.
He said this situation has hampered the efforts of the owners of the plant to boost electricity generation in the country.
Egbin Power Plc is the largest power generating station in Nigeria with an installed capacity of 1,320MW consisting of six units of 220MW each.
Adesina, who blamed the liquidity crisis on what he called inconsistent regulation, however told journalists in Lagos that the investors would add more 1,350 megawatts to the 1,320 megawatt-capacity plant to hit a generation target of 2,670 megawatts by 2019.
He stated that as part of the efforts to achieve the additional 1,350 megawatt-capacity, the owners of the plant have commenced the feasibility/viability studies; Environmental Impact Assessment (EIA), Front End Engineering Design (FEED) and have also set in motion the process of signing the Engineering Procurement and Construction (EPC) contract for the new capacity.
“All these things have begun and 2019 is the projected period of completion. It is expected that by 2019, we will fire the second unit of Egbin Power Plant,” Adesina revealed.
“All we are doing is predicated on receipt of money for services rendered. We are not receiving payment for services rendered,” he lamented.
Adesina further stated that the owners of the plant have executed the performance agreement signed with the Federal Government up to the tune of 100 per cent, adding that the performance agreement was predicated on the activation of the Power Purchase Agreements (PPAs) and Gas Supply Agreements (GSAs).
He however, added that despite the declaration of the Transitional Electricity Market (TEM), which effectively brings all actionable agreements into effect, the PPAs and GSAs have not been activated.
According to him, the non-activation of the PPAs and GSAs has led to a situation where Egbin is owed huge debt for power generated and is also not allowed to operate optimally.
Adesina alleged that there is regulatory inconsistency, which has also led to the inability of the operators to fully access the N213 billion power intervention fund set aside by the Central Bank of Nigeria (CBN).
According to him, the operators have been able to draw only 25 per cent of the intervention fund.
He however commended the apex bank for coming up to rescue the system from the liquidity crisis, noting that “the N213 billion that was set aside; we have only been able to draw 25 per cent or so from the money. The 75 per cent that we would have drawn could not be drawn because of the fact that the regulator changed the tariff model.
“The tariff model that was applied for the purpose of establishing the CBN fund changed suddenly and the moment it changed, economists calculated the implication of that change and said that there won’t be any flow back in the system because the CBN fund is not a free gift; you have to pay back.
“It is a loan meant to cushion the effects temporarily for us to be able to invest in some of the things we needed to do in other to achieve the results we desired.
“But unfortunately, when the regulator changed the model, CBN said No, because the money with the CBN is people’s money. It is not that they went to print money that they are dashing out. It is money predicated on the fact that there will be a payback period and payback mechanism to support it. The moment that happened, it was stopped,” Adesina explained.
The Egbin power plant is the nation’s biggest power generating outfit with a huge capacity to contribute to the national grid.
The management of the plant had emphasised its commitment to the transformation and expansion programme on the plant in order to accelerate the nation’s drive towards sustainable power generation and distribution.