Why electricity market take-off is delayed, by NERC

nerc122 April 2014, Abuja – The Nigerian Electricity Regulatory Commission (NERC) may not implement the Transitional Electricity Market (TEM) policy soon, its Chief Executive Officer, Dr Sam Amadi, has said.

He told The Nation that it would be futile to declare the market open because of problems, such as tarrifs and shortfall in gas supply.

He said indices, such as calculations and pricing, must be engaged in the buying and selling of electricity before the market is opened.

“The Commission is monitoring the market conditions. Once the conditions are satisfactory to stakeholders, including NERC, the power generation companies (GENCOs) and distribution companies (DISCOs), among others, we would declare the market open. If the conditions are not okay, we would not declare the market open. The review of the market conditions is on-going; when it is completed and growth mitigating factors are addressed, we would know what to do,” he said.

He described TEM as a post-privatisation phase, where energy will be bought and sold based on agreement among stakeholders, adding that its operations are crucial to the industry.

The market, Amadi said, allowed the GENCOs and DISCOs to buy electricity without going through the bulk trading agency.

Also, the Head, Power Procurement & Power Contracts, Nigerian Bulk Electricity Trading Plc, Yesufu Alonge, said there were some assumptions in the fixing and implementation of tariff adding that the market may not start until these problems are solved.

“There are lots of assumptions around the tariff. I understand that a consultant has been hired to work on the assumptions as part of efforts to ensure the commencement of the operations of the market. NERC will validate the outcome of the review. This, among others, would help in determining the terms of the market,’’ he added.

He said a workshop was organised to address issues impeding the take-off of the market, adding that the interim market rules are being addressed.

ALonge said the main rules to govern the market would be rolled out later.

The implementation of the TEM was expected last month, but was postponed following complaints by chief executive officers of the 15 power generation firms.

The complaints include operational losses, tariff review and challenges in gas supply.

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