Electricity operators commit to 5,000MW from July 1

Electricity operators in Nigeria have committed to delivering 5,000MW of power from July 1, under the pain of sanctions if they default, the regulator has said.

Sanusi Garba, Chairman, Nigerian Electricity Regulatory Commission (NERC) in a press briefing on Wednesday in Lagos, said the absence of commercial contracts underpinning transactions within the sector has been a major challenge and the commission was poised to resolve this.

“Effectively from July 1, all electricity market participants have committed to 5,000MW.

“We are currently moving to ensure that we achieve stability now and that is why the government is making investments to improve the grid so that 5,000MW will be our benchmark from July,” Garba said.

The new contracts, according to the NERC Chairman, obligate power distribution companies (DisCos) to take the power sent to them or pay for it.

It will also compel the Transmission Company of Nigeria (TCN), the Federal Government-owned participant, to ensure that the grid remains stable enough to wheel the contracted volumes from July.

Power generation companies have also been compelled to sign contracts with gas suppliers for the required gas volumes to maintain the projected power delivery.

Eighty percent of Nigeria’s power generation is from gas-fired power plants and a lack of firm contracts has forced suppliers to prioritise other users, said Sanusi.

The commission, he said was moving to ensure that all contracted gas volumes are fully paid for.

The NERC chairman said the commission was going to enforce this contract by ensuring that erring market operators pay stiff penalties for failing to meet their obligation.

“We have had discussions with all the participants and secured their commitments. All stakeholders have made a commitment and there will be consequences for failing to meet them.

“DisCos will pay damages in the event that they reject power.

“But beyond paying penalties, we are keen to resolve the issues in the power sector and that is why we are engaging all the players to ensure that the rules are followed,” Garba said.

Isaac Anyaogu

Isaac Anyaogu is an Assistant editor and head of the energy and environment desk. He is an award-winning journalist who has written hundreds of reports on Nigeria’s oil and gas industry, energy and environmental policies, regulation and climate change impacts in Africa. He was part of a journalist team that investigated lead acid pollution by an Indian recycler in Nigeria and won the international prize - Fetisov Journalism award in 2020. Mr Anyaogu joined BusinessDay in January 2016 as a multimedia content producer on the energy desk and rose to head the desk in October 2020 after several ground breaking stories and multiple award wining stories. His reporting covers start-ups, companies and markets, financing and regulatory policies in the power sector, oil and gas, renewable energy and environmental sectors He has covered the Niger Delta crises, and corruption in NIgeria’s petroleum product imports. He left the Audit and Consulting firm, OR&C Consultants in 2015 after three years to write for BusinessDay and his background working with financial statements, audit reports and tax consulting assignments significantly benefited his reporting. Mr Anyaogu studied mass communications and Media Studies and has attended several training programmes in Ghana, South Africa and the United States

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