power sector privatisation
Nigerian Electricity Regulatory Commission (NERC)’s new multi-year tariff order (MYTO) document states that the country’s investment profile could considerably improve.

The new MYTO document has been drafted for the Transmission Company of Nigeria (TCN) for the period of 1 January 2016 to 31 December 2020.

The Guardian reported that the MYTO has the potential to considerably improve Nigeria’s yearly investment profile by N1.36 trillion ($683,521billion) over the next five years.

In addition to this projection, power generation is also estimated to escalate up to 5,465MW by the end of 2016; 7,199MW in 2017; 8,999MW in 2018; 10,493MW in 2019 and 11,383MW by 2020.

Numerous projects underway

The report includes details on which of the projects are anticipated to add to the national grid, which include Kainji power plant expected to be generating 400MW by 2020; Jebba, 462MW; Shiroro, 554MW; Egbin, 1,100MW; Sapele, 400MW; Delta, 900MW and Afam iv-v, 500MW.

Likewise, Geregu gas is expected to hit 282MW; Omotosho gas, 336MW; Olorunsogo gas, 336MW; Geregu NIPP, 378MW; Sapele NIPP, 250MW and Alaoji NIPP, 500MW.

According to the Guardian, the document further stated that in relation to capital expenditure included in the Transmission Use of System (TUOS) are N206.212 billion ($103,639 million) in 2016; N418.504 billion ($

2.10346 million) in 2017; N265.203 billion ($1.33295 million)in 2018; N247.828 billion ($1.24562 million) in 2019 and N224.395 billion ($1.12784 million) in 2020.

Comprehensive review

[quote]The document further revealed that the NERC conducted a comprehensive review of TCN’s submission and has approved additional revenue requirement for TCN, allowing it to expand as well as adequately maintain and operate its network, which would be in line with the expected growth in the Nigerian Electricity Supply Industry.

According to the document, the cost of capital included in the MYTO is intended to provide a return on existing assets and appropriate incentives for future investment.

“NERC in 2012 determined that TCN’s initial asset valuation will largely reflect historical costs plus recent additions to TCN’s asset base. This provides an initial asset value at the beginning of 2012 of N189 billion. In order to calculate the asset value in each year of the tariff period, the forecast capital expenditures are added to this amount and depreciation plus any reduction in asset values due to the optimisation are deducted. However, this was reviewed in this tariff review to reflect additional asset,” the document read.

Market participants required

The document also highlighted that market participants will be required to pay a number of institutional charges in order to enhance the effective regulation and administration of the electricity market.

These charges, it said, are the regulatory charge, system operation charge, market operation charge and payment for ancillary services.

In conclusion, the document reassured that NERC will continue to review TCN’s tariffs twice over a period of two years as part of the minor review. “However, with effect from the issuance of this MYTO-2015 Order, minor reviews will henceforth apply retroactively by taking into account changes (gains/losses) that occurred within the minor review period in adjusting TCN’s tariffs bi-annually.”

“This is fair to both TCN and its customers in order [to] not unduly short change any party on account of market indices not fully within their control”.