The N39 billion debt by the federal government and that of its other customers are crippling Egbin Power. Kola Adesina, chairman of the 1,320 megawatts (mw) capacity power plant located in Lagos lamented that the plan to raise the plant’s capacity by an additional 1,350mw to hit 2,670mw by 2019 could be threatened by the challenges.
The huge debt profile, according to Adesina, remains a major hurdle for the company in its bid to drive its growth agenda in the country. He also said that the non-activation of the Power Purchase Agreement by the government was also posing operational challenges to the firm, and that the management had fulfilled all performance agreements entered into with the government upon acquisition of the plant since November 2013. Adesina said the Egbin plant, prior to its privatization, was in a deplorable state generating only about 500mw. He said, “The plant before then had not undergone any major overhaul; the six units were not functional, and in particular Unit 6 had not been working for 10 years. But to date, we have rehabilitated all units and are currently generating 1,100MW.”
Apart from the total turnaround, he also said the firm’s management had secured security for its facility to avert infringement by unauthorized persons. He added that, “We now have in place new distributed control system of global standards, fire alarm detection system that was not in place earlier, and have installed gas meter system to capture the quantum of gas received. We have also improved on our operational performance, but government still owes us for electricity generated. No matter how keen you desire to transform your nation, or the patriotic zeal, the necessary impetus is lost when you don’t get paid for services rendered”.
Speaking further, Adesina pointed out that “Upon acquisition, the exchange rate was N158 to a dollar, and now it is N199.5 to a dollar, and you can see the huge differential for a company that sources its tools abroad to keep the plant running and whose business plan upon acquisition was predicated on N158, it is impacting on us negatively. He also criticized some institutional issues that had not been resolved which include regulatory and policy matters.