Nigerian government evolves a new policy to enable bulk electricity users buy power directly from generating companies 

• By Anayo Ezugwu

AT last, the federal government has approved a new policy to enable electricity customers to buy power directly from the electricity generating companies, Gencos. The policy which was approved by commissioners at the Nigerian Electricity Regulatory Commission, NERC, on November 1, and presented to Babatunde Fashola, minister of power, works and housing, is expected to enable Large Power Users, LPU, have options to get electricity from operators other than the electricity distribution companies, Discos.

With the declaration and subsequent roll out of the policy, each of the four categories of eligible customers in the electricity market now has an option: either to contract supply directly from the Gencos or to demand robust supply regime from their Discos.

The new policy of NERC obtained from its website mapped out certain customers that can buy power directly from the Gencos without passing through the 11 Discos as practiced before. These customers can exit from a Disco after a three-month notice to it, and also reconnect following same procedure, it says.

After the presentation at his office in Abuja, Fashola noted that NERC is the umpire in the power sector through implementations of policy statements of the ministry. The minister, who recounted the gains and challenges of the new policy, said it would help more customers to get power supply and ensure that more private investments are brought into the distribution value chain of the sector.

Presenting the regulation earlier, Sanusi Garba, vice chairman NERC, said the commission formed an internal committee led by Shamsudeen Mahmud who led a team of professionals to draft the consultation paper. “The commission also benefited from technical advisory support from USAID because we needed to leverage on the experience of the emerging economies in the area of eligible customers. The commission has set a two-phased implementation process beginning with the immediate registration of customers who are eligible to cut off from the Discos and have their electricity supply through the Gencos or the Transmission Company of Nigeria, TCN,” he said.

There is potential for loss of some customers at the 11 Discos which may result in lower revenues for the incumbent regulated utilities. The discos through the Association of Nigerian Electricity Distributors, ANED, said the sector was not ripe for the declaration.

Earlier, Sunday Oduntan, spokesman, ANED, said the electricity market is not competitive at this stage to trigger the declaration.

Reacting, NERC said the commission expects that since some customers will cut out from the Discos, they should have more power to give to the existing customers to raise their revenue. In the regulation, there is a provision for what is described as tariff rebalancing. Daily Trust reports that in a situation where the impact of the exit of some eligible customers significantly impacts on the recovery of approved revenues by the Discos, NERC may consider tariff rebalancing and that, “the impact of the rebalancing may require a slight revision of tariffs for some classes of customers.”

There is also another section, the Competition Transition Charge, CTC, which is backed by Section 28 of the Electric Power Sector Reform, EPSR Act 2005. The CTC, according to the regulation, will be an additional 20 per cent of the tariff being paid by the eligible customer.

However, the Association of Power Generating Companies, APGC, backed the new policy. The group, which represents the Gencos, said the declaration will ensure that issues of over 2,000mw stranded electricity generation and poor market liquidity will be resolved as the Discos are not remitting enough to the market to boost further sector investments, Joy Ogaji, executive secretary, APGC, said in an earlier statement. She also noted that issues of load rejection by Discos will be over as such excess power will be channelled to the eligible customers and no longer to the Discos.

–  Nov 10, 2017 @ 11:18 GMT |