BusinessDay

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.

Read also: How electricity distribution companies are finding profit across geopolitical zones

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.

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