Standup9ja - Power sector puzzle: A willing seller and an unwilling buyer
Titi (Power Generation Companies, GenCos) is an Akara
seller (Electricity Generated), she was approached by Mama Jubril
(NBET- the Government appointed bulk buyer and wholesaler who promises
to buy the power and provide payment guarantee to the GenCos) who
promised to pay for all her Akara.
Mama Jubril, further informs Titi that she has willing and capable customers she can sell to (DisCos- who buys from NBET and sells to Nigerian home users and industries) and pay Titi for the one thousand (1000) Akaras
(All Electricity Generated and put on the Transmission Grid).Titi
agrees with Mama Jubril knowing that the Oga at the top (Federal
Government, FGN) is behind her and has promised to guarantee and pay for
all Akara Titi can produce.
In
a similar vein, for better transportation arrangement, Mr Okafor, the
van/truck driver(Transmission Company of Nigeria (TCN) managed by FGN)
who is responsible for the delivery of the Akara was introduced to Titi by the Oga at the top (FGN). Mr Okafor promised he can deliver (can transmit over 5,000MW of electricity) the Akara
Titi produces. Titi raised the issue of possible truck failure with Mr
Okafor but he vehemently argued that he has several plans in the
pipeline to put his truck in place and even increase his capacity to
deliver more than what Titi can produce.
Titi,
in order to avoid disagreements, insisted that they all sign
agreements. She signed agreements with Mama Jubril (Power Purchase
Agreement, PPA), Mr Okafor (Transmission Agreement) and the Kerosene or
firewood sellers (Gas Sales and Transportation Agreements GSA &
GTA). In order not to disappoint Mama Jubril, Titi quickly ran to
various banks including UBA, Guarantee Trust, Sterling, and Standard
Chartered Bank etc for loan facilities and signed agreements with them.
With
all these guarantees from all parties, the Loan was given to Titi to
enable her buy her ingredients: beans, utensils, Frying pan, crayfish,
pepper, onions, salt, oil (representing spare parts, lube oil, machine
operators, Water usage/rights etc.) and firewood or kerosene (Gas), Titi
even hired some boys and girls (O&M team, plant operatives, etc.)
to help her out for quick and efficient production of the Akara.
Titi prepared the one thousand Akara
(electricity) as agreed, and sent it to Mr Okafor for delivery. Mr
Okafor starts complaining of having problems with his truck and that he
can only deliver 800 Akaras (who pays for the additional 200 Akaras already produced?).
Out
of the 800 Akaras, he carries on behalf of Mama Jubril (NBET) to her
customers (DisCos), about 300 Akaras were further rejected (Power
rejection by Distribution Companies, DisCos) because according to them
Mr Okafor delivered them to the wrong address. They prefer another
address. Mr Okafor responding to them said he is a Government driver and can only deliver the Akara to the addresses his supervisor (Systems Operator, a Unit under TCN) gave to him.
Deducting 500 from the original 1000 Akaras
agreed to be produced, that is after the rejection both by Mr Okafor
(Transmission) due to his truck condition as well as the Akara rejected
by Mama Jubril’s Customers (DisCos) due to wrong address, of the
remaining part sent to Mama Jubril (NBET), she pays whatever she likes,
sometimes she pays for 120, 200, 180, 150 or 110 as the case may be.
Mama Jubril’s excuse is that her customers (DisCos) refused to pay her
after selling (distributing the electricity generated by GenCos) the Akara.
Then on the other hand, Titi’s Akara consumers are asking her to produce more because her Akara
is “one in town” and that she should increase her production to two
thousand since the one thousand, she is currently producing is not
enough.
Titi (GenCos), loves making Akara (Generate more Electricity) and wants the economy to improve since her Akara
(electricity is the lifeblood of the nation) is considered “one in
town” and is good for the health of consumers (Nigerians and
businesses).
However, like any other business person, Titi is asking for payment of the Akara she has supplied and has not been paid for. Mama Jubril (NBET) is blaming the Customers (DisCos) she supplied the Akaras to,
the Customers on their part (DisCos) are blaming their Consumers
(Nigerians, Businesses and Government Offices), Consumers are insisting
they are paying for every Akara (Electricity) consumed by them.
They are dribbling Titi here and there whilst the Consumers are also
blaming her for not producing enough Akara!
Titi
does not have any direct contract/agreement with Mama Jubril’s
customers (DisCos) and should certainly not intrude or be affected by
how Mama Jubril decides to sell the Akaras she gets from her as she has a wholesale agreement(PPA) with her.
Titi’s
business is now going down because she is not able to continue getting
loans from the bank to sustain a business where the banks cannot get
their interest and/or capital. Titi is finding it almost impossible to
keep buying all the ingredients she needs for the Akara business
including the kerosene and firewood. Also, Titi is finding it hard to
keep her salary commitment to the well trained boys and girls who have
been working very hard to keep her business going. Prizes of things have
all doubled yet her prize is same, all she asks is full payment of the
outstanding.
If you are Titi (GenCos), can you continue to produce more Akara (electricity)? Knowing you will not be paid in full? Can you increase the number of Akara
(Increase Electricity Generation)? Knowing that even the driver
(transmission) cannot deliver (transmit) the quantity you are producing?
How can you even manage the Bank loans? The worker’s salary? Who takes
responsibility for the rejected Akara (rejected electricity)
since Titi cannot store it (considering power cannot be stored)? Who
pays for the kerosene and firewood (gas and other materials used in
generating) used to prepare the Akaras? Should Titi continue to sell the Akara (electricity) to Mama Jubril knowing she is incapable of paying for them? How best can Titi transport her Akara to Mama Jubril since Mr Okafor is the only transporter of Akara in Nigeria? Since Mr Okafor’s truck is faulty and may not be fixed anytime soon, do you advise Titi to increase her production?
This
is the summary of the problems in the Nigerian Electricity Market.
Nigerians are very intelligent people, they should decide for
themselves, the solution to this conundrum.
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