The Nigeria electricity industry is set to enter a new phase in the form of the Transitional Electricity Market (TEM) which transforms the industry with binding contracts for electricity trading arrangements.
The TEM is part of the Nigerian electricity reform agenda which will contractually bind operators, power producing assets, and electricity supplies.
The Nigerian Electricity Regulatory Commission ( NERC), has announced that the nation had met all the conditions required for this critical phase, and that the Commission would immediately advise the Minister of Power, Prof Chinedu Nebo, to make the statutory declaration declare the market open for trading on the terms of TEM, reported the Guardian in Lagos.
Nigerian Electricity Regulatory Commission (NERC) has said that Nigeria's liberalised electricity market is now ready to go into the next stage of its transitional phases that would provide heavy penalties for contracted failures.
NERC Chairman, Sam Amadi, said in Abuja that the sector would now enter a very critical phase that would ensure better delivery for consumers.
The final condition for TEM was the establishment of a market Dispute Resolution Panel (DRP) which it has now accomplished.
Inaugurating a 12-man Dispute Resolution Panel set up as part of the CPs by the Commission to mediate on conflict of interests between market participants in Nigeria's Electricity Supply Industry (NESI). The NERC also stressed that informal CPs that were not listed in the interim market rules, but were necessary for the market to operate optimally, are been finalised by the Commission.
Under the TEM, distribution companies are also required to activate extant vesting contracts with the Nigerian Bulk Electricity Trading Plc (NBET), while generation companies would activate their Power Purchase Agreements (PPAs). The Gas Supply Agreements (GSAs) with gas suppliers would also be activated.
‘Now that we have completed the last of the formal conditions precedents and we are effectively handling the informal conditions precedent, NERC is poised to recommend to the minister of power to declare the commencement of TEM at a named date,’ stated Amadi.
Amadi continued: ‘In the days ahead, we will notify the minister of power to make such declaration. We are confident that the Nigerian electricity market is ready to successfully enter the transitional stage.’
The formal CPs include the approval of grid codes and market rules, establishment of an independent regulator, establishment of market operation and system operation with functional capabilities and the establishment of a market dispute resolution mechanism.
‘Today's celebration marks the completion of the formal CPs. NERC recognises that there are some informal CPs not listed in the market rules but necessary for the optimal working of the market. These include a fully cost reflective tariff, confirmation of reliable gas supply to power plants and validation of gas supply and power purchase agreements.’
Amadi stressed how efforts by his Commission, Central Bank of Nigeria (CBN), ministries of power and petroleum resources to deal with the market's legacy debt and revenue shortfall in a sustainable manner were part of moves to deal with the non-market rule conditions precedent.
The Dispute Resolution Panel
The 12 members of the DRP are reported to be engineers, economists and legal practitioners and have undergone screening on conflicts of interests. They are on a five year, two renewable terms tenure of appointment.
DRP counsellor, Dr Mamman Lawan, heads the panel with the following as members:
- Nnenna Ahakannah
- Ejekam Nnenna
- Adeyemi Oyedele
- Hussani Mohammed
- Boma Ozobia
- Adeyemi Akinsanya
- Tamuno George
- Sadiku Folorunsho
- Olufunmi Roberts
- Okechuckwu Chiazor
- Ezekiel Osarieme
- Augustine Mamadu
NERC however noted that while they are mandated to mediate on matters relating to the market codes, the panel will not be allowed to entertain any matter relating to amendment of the market rules and charges of the market and system operators.