The Nigerian Electricity Regulatory Commission (NERC) has said that Nigerians can expect a significant improvement in the nation’s power sector effective from 1 July 2022.
The marked improvement they said will be facilitated by market participants who have committed in contracts to ensure the generation, transmission and distribution of 5000MW of electricity in the country.
The Chairman of NERC, Sanusi Garba, stated that the Transmission Company of Nigeria (TCN), generation companies (Gencos) and distribution companies (Discos) have committed to sign contracts which mandates them to ensure that 5000MW that is generated will be bought and paid for, and the gas for generation of that capacity is also paid for as and when due.
He said the contracts were part of the ongoing reforms in the power sector which are being initiated and supported by the government, the Central Bank of Nigeria (CBN) and other stakeholders pushing for improvement in the nation’s electricity industry.
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Garba said this was the first time market participants were coming together to commit to pay for energy produced by entering into a contract to ensure payment and highlighting the consequences of defaulting. Nigeria’s power sector has been plagued by ongoing challenges even after the privatisation of the distribution and generation aspects of the sector in 2013, resulting in poor supply to Nigerians.
Grid collapse has become a regular occurrence in the sector with the power grid recording its latest collapse just a few days ago. The country now barely delivers 2000MW power supply to its citizens, with the situation worsening the living conditions of Nigerians.
Garba said this new development would lead to improved service delivery to consumers who require improvement in supply.
He said any of the parties in the deal that fails to play their part according to the terms of the contracts will face consequence, stressing that the targeted 5000MW will only be achieved when all parties comply.
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“So, what we are trying to do is, consumers require the service, the Discos should commit to buying this electricity from those who are generating it. Gencos that are generating the power must commit to buy the fuel to generate that electricity, and the only way it can be done and in a sustainable manner is if it is underpinned by contracts.
“And if any of the market participants defaults, then obviously, there will be consequences for not providing what you said you will do.
“That is the basic explanation of what we are doing which will take effect from first of July. So, we are going to start with 5000MW. Discos will commit to buy and Gencos will commit to generate and ensure that gas is there to provide this power by paying for gas. So, there will be no stories of ‘I don’t have gas to produce’,” said Garba.
The NERC chairman went further, saying that apart from overseeing commitments to deliver 5000MW from the beginning of July, they would also see if there is an opportunity to increase the contracted volumes from 5,000 to 5,500 and eventually up to 7,000MW.
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This, he said, would enable a trajectory of improvement in not just maintaining the targeted volume of power but also ensure stability of supply and the ability to assess if there is enough infrastructure to ramp up commitments to to 7,000MW.
“So, the commission decided that these commercial issues militating against low distribution must be sorted out. For Nigerians to have 5,000MW, there must be a commitment to buy 5,000MW. That hasn’t happened before. This is the first time you have Discos committing to this.
“And the TCN will be committed to deliver that 5,000MW. And we have identified power plants that will come and contract for the gas to deliver 5,000MW. It hasn’t happened before,” said Garba.
He stated that the point of the initiative is to try and steer the market back to a way it was designed to work in the first place.
The commission also disclosed that the phase 1 of the National Mass Metering Programme (NMMP), whereby four million locally manufactured meters would be rolled out for customers, would begin by the end of August this year. 45 Local prepaid electricity meter manufacturers have submitted their bids and the programme is still in the procurement stage.
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