A Review of the Nigerian Energy Industry

Power generating firms sue govt over discrimination, demand N1 trillion payment

*Egbin Thermal Power Plant.

Oscarline Onwuemenyi

10 March 2018, Sweetcrude, Abuja – Power Generation Companies (Gencos) in Nigeria 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 Nigerian 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, a copy of which was obtained by our correspondent in Abuja, the Gencos are claiming that the Nigerian government and its agencies have treated and intend 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 backward 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 Federal government during the privatization exercise in 2012.

The Gencos also 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.

The plaintiffs in the suit are asking the Court to declare that the government and its agencies are duty bound to be fair, just and/or equitable in all their actions, dealings and directions; that the defendants cannot lawfully take any step which has the effect of violating the legitimate expectations of the GENCOs to be treated equally, justly, fairly and reasonably.

The GencoS are also praying the Court to grant an Order of Perpetual Injunction restraining the 1st – 4th defendants from applying funds from the Payment Assurance Facility for the payment of bills and invoices submitted by the 5th and 6th Defendants (Azura and Accugas) to the 4th Defendant (NBET) for payment/settlement in a manner and form which ensures that the percentage of the 5th and 6th Defendant’s invoices paid by the 1st to 4th Defendants is higher than the percentage of the GENCOs invoices paid by the Defendants or which gives preferential treatment to the 5th and 6th Defendants or discriminates against the Gencos.

The suit has been fixed for the hearing of the GENCOs Application for Interim Injunction on April 16 by Justice Binta Nyako of Federal High Court, Abuja

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