Power Generation Companies (GENCOs) have sued the Nigerian government for alleged discriminatory treatment of the companies and their gas suppliers with intent to harm their business interests.
The GENCOs also accused the government of conferring preferential treatment on Azura Power West Africa Limited and Accugas Limited to the detriment of the Nigerian Electricity Supply Industry and the power sector as a whole.
The suit filed at the Federal High Court, Abuja, has the GENCOs represented by Mainstream Energy Solutions Limited (“Mainstream”), Transcorp Power Limited (“Transcorp Power”), Egbin Power Plc (“Egbin”) and Northsouth Power Company Limited (“Northsouth”) as the plaintiffs in the suit.
The defendants are the Federal Government of Nigeria (1st defendant), Central Bank of Nigeria (2nd defendant), Minister of Power, Works & Housing (3rd defendant), Nigeria Bulk Electricity Trading Plc, NBET, (4th defendant), Azura Power West Africa Limited (5th defendant) and Accugas Limited (6th defendant).
According to the suit, the GENCOs are contending that the Nigerian government and its agencies have treated and intends to continue treating the GENCOs, their investors and suppliers unfairly and in a discriminatory manner.
This, the plaintiffs said, was despite the fact that the GENCOs have been bending backwards to continue generating electricity for the national grid, making huge sacrifices, bearing the excruciating burden of not being paid for electricity generated and sold to the Nigerian Bulk Electricity Trading Plc. (NBET), and facing the threat of going into extinction as a result of their huge indebtedness to banks and financiers who provided the foreign currency-denominated acquisition loans with which the power plants were acquired from the FG during the privatization exercise in 2012.
The GENCOs claimed that NBET has consistently defaulted in paying them for all electricity generated and put on the national grid in breach of its contractual obligation, which required that the GENCOs be paid fully not later than 45 days of invoice submission, and upon delay in payment be paid with interest at the agreed rate.
By reason of the failure of NBET to pay the GENCOs, they said they have in turn been forced to default in meeting their obligations to their lenders, O&M contractors, equipment manufacturers, service providers and other persons and entities engaged by the GENCOs for the purpose of ensuring the smooth and effectual generation of power in all power plants owned, controlled and/or managed by the GENCOs.
The GENCOs put the amount owed them for electricity generated and supplied by them is approximately N800 billion, adding that together with capacity and interest payments due to them, they are owed in excess of N1 trillion.
But they claimed that as a way to addressing the huge mounting indebtedness of FG and NBET to the GENCOs, the FG working with the Ministry of Power, Works and Housing, NBET, CBN and the GENCOs created as a temporary relief, with the N701 billion Payment Assurance Facility under which the GENCOs were to be paid for all electricity generated and supplied from January 2017 to December 2018.
The process of working out the facility and the presentation of same to the GENCOs clearly indicated that the N701 billion Facility was meant to pay existing GENCOs as at the time the facility was put in place, as the target beneficiaries.
The GENCOs however said that they are aggrieved that the government has not kept faith with payments from the N701 billion facility as payment timelines are not clear, regular or consistent.
Again, they said only 80% of invoiced amounts are paid whenever the FG chooses to pay, with 90% of gas suppliers invoices paid directly to gas suppliers out of the said 80% payment and whatever is left of any payment tranche is hardly sufficient for any meaningful activities of the GENCOs.
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