10 February 2015, Abuja – The Nigerian Electricity Supply Industry, NESI, has commenced the much awaited Transition Electricity Market, TEM, whereby wholesale buying and selling of electricity is based on contractual and regulatory rules. This is sequel to directive by the Nigerian Electricity Regulatory Commission, NERC, announcing the takeoff of the transitional market on February 1, 2015.
With this development, a greater degree of business and investment certainty has been introduced into the country’s electricity market, with the welcome result of setting an even firmer basis for increasing the amount of electricity available to Nigerians in short order.
The Chairman of NERC, Dr. Sam Amadi, while commenting on the importance of this stage of the market, said, “This will ensure more discipline, corporate governance, guarantee recovery on investment as well as give certainty for a sustainable and growing electricity market that would serve the need of Nigerians.”
Application and enforcement
NERC in its Order said, “Conditions precedent set out in the market rules and subsequently agreed to be necessary for effective TEM have been satisfactorily fulfilled.
“With effect from February 1, 2015, the amendments to the Market Rules and application and enforcement of the said Market Rules shall be in full force. With the effectiveness of the Market Rules, as amended, the Transitional Stage Electricity Market shall commence with effect from the same date.”
One of the implications of TEM is that the gas bottleneck which has constrained electricity supply would be reduced as gas will be supplied to electricity generation firms on a legally binding basis as regards delivery and payment.
Besides, the failure of electricity distributions companies to pay for energy bought from generation firms and for deliveries on their privatisation performance obligations will now attract sanctions in line with the Market Rules and contractual obligations.
The Order dated December 31, 2014, further directed all relevant market participants, service providers and the Nigerian Bulk Electricity Trading Plc, NBET, to comply with effect from February 1, 2015.