Ahead of the transitional electricity market bound to start very soon, the Nigerian Bulk Electricity Trader (NBET) has appointed Stanbic IBTC Bank its payment agent in an arrangement seen as an important strategy to instill confidence and transparency in the Nigeria’s electricity market and to attract more investors.
The appointment would see Stanbic IBTC Bank, which emerged through a transparent selection process handled by KPMG professional services, undertake payments on behalf of the bulk trader and also support its treasury functions.
Rumundaka Wonodi, managing director and chief executive officer, NBET, said on Tuesday that the arrangement puts the bulk trader in a position where within the market, the generation companies that the bulk trader is obligated to make payments to, know that there is a payment agent with supporting treasury that would allow payments to be made promptly.
The payment services and solutions agreement between the NBET and Stanbic IBTC was signed on Tuesday in Abuja.
Wonodi said it was important for them to have gone through this procurement part to contract an agent that would support the bulk trader, thereby “keeping it a lean and efficient institution.”
“One of the issues that we have had in the electricity market is that before the transition electricity market, even before this current period, payments and transactions seem to be crowded in a way that is not very clear to market participants,” Wonodi said.
“So through this process, we hope that the generation companies will have the confidence and the comfort that when they send invoices to us, they have an institution that all has the capacity to undertake those services on our behalf. That way, the confidence in the market would be enhanced and sustained.”
With a current capitalization of N128 billion ($800 million), the NBET enters into power purchase agreements with the generation companies and resells power to distribution companies through the vesting contracts, thereby serving as a credit-worthy counter party for the current and future electricity generation projects.