7 December 2017

Nigeria: Gencos - Eligible Customers' Bye-Law Will Break DISCOs' Monopoly

Abuja — Power generation companies (Gencos) in Nigeria have said the eligible customers' regulation recently passed into operation by the Nigerian Electricity Regulatory Commission (NERC) has the potential to break the monopolistic tendencies of the 11 electricity distribution companies (Discos).

The Gencos said in a recent statement from their umbrella body - Association of Power Generation Companies (APGC) that the regulation would infuse in the country's power market, the kind of competition it needs to develop into a full-fledged contract-based market.

Signed by the Executive Secretary of APGC, Dr. Joy Ogaji, in Abuja, the Gencos said in the statement that the new regulation offered the market an opportunity to break away from the monopolistic entities it inferred the Discos had become.

"With stranded generation capacity in the electricity market and poor market liquidity, declaration of eligible customer is the brilliant way to liberate the electricity sector from current monopoly," said the Gencos.

They listed the ways the market and consumers would benefit from the regulation, saying it would: "Confer on consumers, power to choose energy supplier and creates a more efficient electricity market, stimulate investment in the electricity sector since generators can sign long term contracts, deliver lower prices, enhanced service performance, and new service offerings for small consumers through competition, and send a powerful signal that the electricity sector is evolving towards full retail competition."

They further stated that the regulation would: "Allow a greater variety of suppliers to find innovative ways of discovering and providing what different groups of customers want in economical ways, promote national economic development through supply of electricity to the productive sector of the economy, support economies of scale through bulk purchase of electricity, reduce technical and non-technical losses for bulk high voltage supply, and reduce financial risk by supplying credit worthy eligible consumers"

According to the Gencos, the new regulation would also introduce competition on the demand side of the market, while completing the liberalisation of the country's electric systems and put greater pressure for efficiency on the suppliers.

It noted that utilities holding a monopoly in the sector have traditionally paid little attention to customer service, and that the regulation could change this and force them to become focused on their consumers.

"The presence of retailers, or the mere possibility of future competition will force existing distributors to establish appropriate customer services and commercial divisions," added the Gencos in the statement.


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