The Chief Executive Officer of the Association of Power Generation Companies (APGC), Joy Ogaji has kicked against threats to disconnect its members from the national grid, warning that unstable transmission and market failures are damaging their plants and deepening losses.
The power Generating Companies (GenCos) also demanded regulations mandating the immediate payment of their revenue by offtakers. This is coming after threats by the Federal Government-owned Nigerian Electricity Regulatory Commission (NERC) that GenCos who fail to install the Free Governor Control (FGC) would be disconnected from the grid.
NERC had recently ordered that any GenCo that fails to comply with the integration and activation of FGC on all generating units by 30 November 2025 would be liable to a penalty of a pro-rated 10% of the invoice associated with the defaulting generating unit, and any generating unit that records 90 consecutive days of FGC non-compliance would be disconnected from the grid.
In the response, Ogaji said that GenCos appreciated the commission for trying to provide direction and leadership in the sector but insisted that the foundation of the power industry was being undermined by inefficiencies in grid management and poor financial discipline.
‘In all jurisdictions, the imperatives of the power transmission networks cannot be overemphasised. This is because the transmission network constitutes the vital channels of the entire power value chain. It goes without saying that the growth of the power sector is contingent on the development of a robust and non-collapsible transmission grid/network’, she said.
Ogaji stressed that Nigeria’s thermal and hydro plants were being forced to operate far below their baseload design, causing efficiency losses and higher costs.
‘Any fluctuations in these conditions can cause the appliances to run at a lower efficiency. Power generators, like the hydros and thermals used in Nigeria, are no exception to this. Thermal power plants, like the gas turbines, are designed to operate optimally and efficiently at base load’, she stated.
According to her, grid disturbances have repeatedly pushed the system outside operational limits, endangering power plants and tripling maintenance costs.
Ogaji noted that frequency deviations out of tolerable zones are not only damaging the GenCos units but also are increasing considerably the maintenance costs, close to three times the normal maintenance costs.
‘The intervals between maintenance will decrease, and it will need more time for completion with a greater downtime of the generating units’, she warned. She argued that the absence of spinning reserves remains a major weakness.
‘A fundamental aspect of operating an electricity power grid reliably is maintaining the frequency limits within the acceptable range. The nominal frequency in the NESI is 50 Hz. Maintaining power system frequency at a constant value is very important for the health of the machines. How can this be achieved without spinning reserve?’ she asked.
On the debate over the Free Governor Mode of Operation (FGMO), she said, ‘Maintaining Free Governor by GenCos is part of the design of all power plants, and if followed, it will reduce the frequency of incursions. The question then is, can FGMO alone resolve the grid/system collapse or minor system disturbances amid load rejections, steel mills, etc.? Experts have argued, and rightly so, that free governor, though relevant for grid stability, should be implemented side by side with other grid code requirements’.
Ogaji also faulted the impact of steel mills on the grid, saying, ‘Steel mills form a large chunk of funds both for the DisCos and the TCN, but are detrimental to the generation machines. It is trite that steel mills create harmonics and cause voltage fluctuations at a very high level. These harmonics create lots of stress on the rotors of the turbines. They create inverse torques on the blades of the rotors, producing cracks and distortions’.
She lamented that GenCos were bearing costs unrecognised by the tariff structure. According to her, operations of gas turbines far away from their baseloads imply a reduction in efficiency, or in other words, an increase in the consumption of gas by as much as 15-20 per cent, a cost not recognised by the Nigerian Bulk Electricity Trading PLC nor captured in the tariff order, and increased maintenance costs.
‘It is imperative to state that even the declared capacity of the GenCos has not been fully utilised nor paid for’, she stated.
Calling for urgent reforms, Ogaji said, ‘Generation companies are willing to work harmoniously with all relevant stakeholders in bringing about a viable Nigerian Electricity Supply Industry (NESI); however, not at the detriment of their machines and personnel. We want regulations mandating immediate payments of all GenCos receivables as prescribed by the various laws or rules in the NESI and as part of the licensing terms on performance’.
