A Review of the Nigerian Energy Industry

Nigeria says declaration of TEM still possible in September

Prof Chinelo Nebo20 August 2013, Abuja – The Nigerian government has said it still expects to officially declare Nigeria’s Transitional Electricity Market, TEM, open in September to herald the commencement of all contractual arrangements in the reformed power sector.

Minister of Power, Prof. Chinedu Nebo, told members of Distribution Companies Roundtable (Disco roundtable), which made a courtesy call on him in Abuja that notwithstanding mild slippages in the conclusion of privatisation of successor companies of the Power Holding Company of Nigeria, PHCN, the government would still declare the TEM open as scheduled.

Nebo explained to the disco roundtable led by their Chairman, Dr. Ransome Owan, that government was working had to ensure that it meets up with fulfilling all of the established condition precedents towards the eventual handover of power assets to preferred bidders but will also appreciate a reciprocation from the preferred bidders to enable it proceed with reforms in the sector.

The disco roundtable had in their visit requested an extension in the payment deadline for power assets ceded to them within the privatisation process by at least 31 days upon the expiration of deadline for payment of their remaining 75 percent bid price obligation.

They indicated that unless government accomplishes all established condition precedents that include settlement of all legacy liabilities in the sector, it will be difficult for it to declare the TEM in September.

Owan had said: “The TEM will herald the start of contractual arrangements in the power sector and the automation of billing and metering operations of the Market Operator in line with the market rules.

“Three condition precedents remain thus, metering of the grid interface points, testing of the market operators’ settlement systems and processes and constitution of a dispute resolution panel. Without the completion of the condition precedents, NERC cannot advice the minister of power to declare the start of TEM.”

He stated that in essence, the all-industry agreements which underpin industry revenue would be deemed illegal and a nullity until declaration is made by the minister. Owan stressed that such policy risk makes it very challenging for local and foreign capital markets to support their financial requests.

But Nebo in his response said: “We appreciate and share your concerns but I am sure you know that the process was supposed to have been completed by December but it didn’t happen, I believe that we should be declaring the transition electricity market open by September, we need you to pay so that we can settle the workers.

“Payment of workers of the Gencos will be concluded this week and then that of the Discos will commence next week. You have given us some tasks; on one hand you are asking us to meet up with all the conditions precedent by 21st of August and on the other hand you are telling us that while we meet up with our own, you are not going to be able to meet up with your own, we will do whatever we can but there is no way we can ensure full payment by the end of August.”

– Chineme Okafor, This Day

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