Electricity market gears for competition as Gencos sell power to customers

Nigeria’s electricity market is bracing for competition after the Federal Government through the Nigerian Electricity Regulatory Commission directed that electricity generation companies can now sell power directly to customers.
The directive is based on the provisions of Section 27 of the Electric Power Sector Reform Act 2005 that allows eligible customers are permitted to buy power from a licensee other than electricity distribution companies.
Prior to this policy, the DisCos operated like a monopoly. Even investors interested in mini grid plants were constrained by the exclusive rights the DisCos assume over their franchise areas. This is changing.
“It will deepen competition in the electricity market,” says Idowu Oyebanjo, a Power System Engineer from the UK.
Oyebanjo further said, “The expectation is that the large industrial consumers like Manufacturers Association of Nigeria, (MAN) industrial clusters and business and energy parks will benefit from this policy. This is will gravitate towards the independent electricity distribution networks ownership.”
The four categories of eligible customers in the Nigerian Electricity Supply Industry (NESI) comprises of a group of end-users registered with the Commission whose consumption is no less than 2MWhr/h and connected to a metered 11kV or 33kV delivery point on the distribution network and subject to a distribution use of system agreement for the delivery of electrical energy.
The next category includes those connected to a metered 132kV or 330kV delivery point on the transmission network under a transmission use of system agreement for connection and delivery of energy.
Other category of customers includes those with monthly consumption in excess of 2MWhr/h, and who are connected directly to a metered 33kV delivery point on the transmission network under a transmission use of system agreement.
The last category comprise eligible customers whose minimum consumption is more than 2MWhr/h over a period of one month and who are directly connected to the metering facility of a generation company, and has entered into a bilateral agreement for the construction and operation of a distribution line with the distribution licensee licensed to operate in the location.

“But it’s not all doom and gloom for Discos,” said Wesley Omonfoman. “Other than those connected directly to the transmission system, eligible customers at 11KV and 33KV would need to enter into an agreement with Discos, called Distribution Use of System (DUoS) to get supply from Gencos.”
Omonfoman further said, “Thus Discos expectedly would still earn their percentage of the revenues due to them from the overall electricity tariff.”

 

ISAAC ANYAOGU