26 September 2017

Nigeria: Power - Nigeria to Normalise Supply Deal With Niger, Benin Republic

Abuja — Nigeria will transfer its current bilateral power supply deal with the Communauté Électrique du Bénin (CEB), and Société Nigerienne d'Electricité (NIGELEC), to the Nigeria Bulk Electricity Trading Plc to regularise the power purchase agreements (PPAs), the permanent secretary in the ministry of power, Mr. Louis Edozien, has disclosed.

Edozien, stated at a recent meeting involving the Transmission Company of Nigeria (TCN) and West African Power Pool (WAPP) in Abuja that the country would migrate the supply pact to PPAs, while encouraging both countries to enter into bilateral supply contracts to generating companies (Gencos) in Nigeria.

Both countries have relied on power supplies procured through bilateral processes from Nigeria to sustain their economy. They also owe the country's electricity market huge debts for supplies already made.

Edozien however said at the meeting: "Concerning proper contracts for electricity consumption by CEB and Nigelec, current policy is to migrate the current supply to power purchase agreements with Nigerian Bulk Electricity Trading (NBET), while encouraging bilateral contracts with available generators and wheeling contracts with TCN for expanded supply.

"Contracts protect you from negligent or incompetent default in supply from your contracted generator. Contracts also protect your contracted generator from payment default."

He also spoke on the need to have both countries clear their electricity debts to the country's electricity market, in addition to having an efficient payment mechanism that would encourage non-stop supplies.

"As the power sector in Nigeria progresses, we are disposed to wheeling more electricity to our international customers. Our primary obligation however is to serve Nigerians; we therefore have to be able to justify our continued supply to international customers to continue to export power, and it is very difficult to persuade our countrymen when the international customers we want supply have not been paying their bills for electricity supply.

"It is therefore necessary that all outstanding bills are paid immediately, and payment mechanisms are quickly put in place to ensure bills are paid as and when due," he added.

He further explained: "Generally, as Discos are making efforts to expand, TCN and Gencos are also expanding to stay ahead of the requirement. This is where the regional market comes in. We may need the regional market to sustain our expansion drive.

"Now that TCN and Gencos are ahead of Discos, we will ensure that it becomes a norm. For the power supply value chain to be sustained, the trading arrangement must be respected and adhered to. "

"For TCN, the only way it can continue to stay ahead financially is that the trading arrangements are viable so if WAPP/TCN builds the second Ikeja West-Sekete 330kV DC and other WAPP back bones, they must be paid for wheeling the power, promptly.

"The generators must also be paid for generating power. That is the only way the trading arrangement would work. Trading arrangements are already captured in our laws and regulations, which is periodically reviewed to accommodate technological advancement, new policies and institutional corporations like WAPP. Moving forward they must be effectively operationalised," Edozien stated.

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