The Chairman, Egbin Power Station, Mr Kola Adesina, on Monday said that the plant in Lagos was facing serious challenges following the N39 billion debt owed it by the Federal Government.
N39bn debt hampering electricity generation a plant - Chairman
Adesina, pointed out that "upon acquisition, the exchange rate was N158 to a dollar and now it is N199.5 to a dollar.
Adesina, who made the disclosure during an interactive session with the media in Lagos, said that the debt was owed the company from Nov. 1, 2013 to date.
He said that the huge debt profile was equally creating some bottleneck in the company’s planned capacity expansion initiative.
He noted that the non-activation of Power Purchase Agreement (PPA) by government was also posing operational challenges in the system.
The chairman said that the management had fulfilled all performance agreement entered into with government upon acquisition of the plant in November 2013.
He disclosed that the management was planning to raise the plant’s capacity by additional 1,350mw to hit 2,670mw by 2019.
According to him, about 1.3 million dollars will be spent on the proposed expansion programme of the plant.
Adesina said the 1.100 Mega Watts Egbin plant prior to its privatisation was in deplorable situation, generating about 500mw.
"The plant before then did not undergo any major overhaul, the 6 units were not functional and in particular unit 6 was not working for 10 years.
"But to date, we have rehabilitated all units and currently generating 1,100mw,’’ he said.
He also said that 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 you desire to transform your nation or patriotic zeal, the necessary impetus is lost when you don’t get paid for services rendered.
"The huge differential is affecting us negatively considering that the company sourced for tools abroad to keep the plant running and our business plan upon acquisition is predicated on N158,’’ he said.
Adesina also criticised some institutional issues that have not been resolved, including regulatory and policy matters.
He noted that the business environment was unpredictable and had affected the company’s ability to access fund from the N213 billion Central Bank of Nigeria (CBN) intervention initiative.
"Under the PPA, government is to pay for electricity generated, but since it is not in place, and in some cases where we generate 1,100 mw.
"And when we are asked to step down to 700 mw due to transmission issues, who pays for the balance,’’ he argued.
For the planned expansion, the chairman said the company had embarked on feasibility study and Environmental Impact Assessment (EIA).
He added that the Front End Engineering (FEE) is to put all in perspective with the Engineering Procurement Contract (EPC).
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