The Niger Delta Power Holding Company (NDPHC) is actively pursuing a multifaceted strategy to enhance its financial stability and operational efficiency, with a primary focus on recovering outstanding debts from its bilateral customers. This initiative is crucial given the pervasive cash flow challenges plaguing the Nigerian power sector, affecting generation, transmission, and distribution companies alike. A significant portion of the NDPHC’s outstanding debt stems from the Nigeria Electricity Liability Management Company (NELMCO), which owes N24.88 billion on legacy assets. Furthermore, the Nigerian Bulk Electricity Trading (NBET) only remits approximately 35% of its monthly invoices, leading to accumulating arrears. These financial constraints ripple through the power ecosystem, hindering the NDPHC’s ability to meet its obligations, particularly to gas suppliers who represent a substantial portion of power generation costs.
The NDPHC’s debt recovery efforts aim to directly address these financial bottlenecks, enabling the company to fulfill its commitments to gas suppliers and, consequently, maintain consistent power generation. This improved liquidity will strengthen the company’s financial standing and contribute to a more stable power supply. The interconnectedness of the power sector ecosystem means that financial instability in one area, like the Discos’ claimed debt, impacts other areas, such as NBET’s ability to fully pay invoices. This domino effect underscores the importance of the NDPHC’s proactive approach to debt recovery as a means to bolster its own operations and contribute to the overall health of the power sector. By securing its financial footing, the NDPHC aims to create a more sustainable operational model that can withstand the challenges prevalent within the Nigerian power market.
Beyond debt recovery, the NDPHC is also tackling the issue of stranded energy, a persistent challenge arising from a generation capacity that exceeds current demand. This surplus energy represents an untapped resource and a potential revenue stream for the company. To address this, the NDPHC is strategically allocating its stranded capacity to eligible customers and bilateral trading arrangements, in accordance with a July 25 directive from the Nigerian Electricity Regulatory Commission (NERC). This directive encourages direct energy sales, allowing the NDPHC to bypass the traditional market structure and directly engage with consumers. This approach is designed to optimize the utilization of existing generation capacity and generate revenue from otherwise unused energy.
The NDPHC’s strategy for managing stranded energy involves engaging with potential off-takers interested in purchasing bulk power directly. Several entities have already expressed interest, with some seeking up to 100 megawatts of capacity each. Zenith Point, for instance, is poised to off-take a substantial amount of power, demonstrating the viability of this direct sales approach. The company anticipates finalizing power purchase agreements (PPAs) with these off-takers in the coming year, further solidifying its strategy for utilizing stranded energy. This proactive approach to finding buyers for surplus energy positions the NDPHC to not only alleviate the problem of stranded capacity but also to generate additional revenue streams that can further strengthen its financial position.
The combined efforts of debt recovery and stranded energy management represent a comprehensive strategy by the NDPHC to navigate the challenges of the Nigerian power sector. By addressing these critical issues, the company aims to improve its financial stability, optimize its operational efficiency, and contribute to a more reliable power supply for Nigerian consumers. The alignment with NERC’s directive also signifies a move toward a more dynamic and responsive power market, where generation companies can more directly address the needs of large consumers. This strategic shift towards bilateral trading arrangements and direct engagement with eligible customers promises a more efficient allocation of resources and a more robust power infrastructure.
In addition to these internal efforts, the NDPHC is also collaborating with other stakeholders to address the systemic issues within the sector, particularly the pervasive liquidity challenges. The new management team, appointed in August 2024, is working in conjunction with government initiatives aimed at improving the financial outlook of the power sector. President Bola Tinubu’s commitment to introducing initiatives that will bolster the sector’s financial health in 2025 provides further optimism for the NDPHC’s long-term sustainability and its ability to continue providing reliable power to Nigerian communities. These collaborative efforts, combined with the NDPHC’s internal strategies, contribute to a holistic approach to strengthening the Nigerian power sector and ensuring its long-term viability.
