A Review of the Nigerian Energy Industry

NBET: Metering gap, gas supply constraints hamper implementation of TEM

24 March 2015, Abuja – The Nigerian Bulk Electricity Trading Plc (NBET) has identified metering gap and inadequate gas supplies to electricity generation companies, as two most significant challenges hampering the smooth implementation of the Transitional Electricity Market (TEM).

The NBET is a federal government company set up as a wholesale power purchasing entity or middleman between electricity generators and distributors.

Prepaid-meters-360x225Under the TEM, which was declared open by the Nigerian Electricity Regulatory Commission (NERC) in February 2015, operators in Nigeria’s electricity market are expected to by law conduct their trading with strict adherence to contracts signed between them in the form of Power Purchase Agreements (PPAs), Gas Supply Agreement (GSA) and Vesting Contracts.

Assessing the industry’s operations so far in TEM, Managing Director of NBET, Mr. Rumundaka Wonodi stated that issues of gas supply and metering gap were still outstanding and would need to be addressed quickly to enable TEM run smoothly.

Wonodi told journalists shortly after the meeting of its board members that having engaged in a ‘shadow trading’ with other relevant operators in the market, it has been identified that except for these two challenges, the industry can smoothly run on TEM especially after taking in all the initial teething problems.

“One of the challenges is that nobody has actually operated this our market according to contract but in the last two months, our contract management team has been working with the regulator and other stakeholders in the market including the Market Operator under what we call the ‘shadow trading’ to see how things will pan out now that we have entered into the transitional electricity market”, he said.

According to Wonodi, “the challenge is what we have been synthesising that is going to actually happen but we have done it very well that we think that there will be some shaky periods but we will definitely get to an even level very soon.”

He explained further: “One of the things is that there are issues regarding how the tariff is being implemented around the country by each of the distribution companies and some of the distribution companies are still having challenges being able to meter customers and be able to extend service to people.

There are also in cases where you have the consumers push back when they feel the tariff has gone much higher than where it needed to be, those are the issues from the distribution end but for us where we are, we also face vandalism from gas pipeline vandalism.

“When it happens (pipeline vandalism), generation companies do not generate enough power to go to distribution companies and then be able to light up homes and you find out that consumers feel very aggrieved by the fact that they have to pay some charges and the power is not coming as promised but it is not with anybody within the sector but the vandals that continue to deprive Nigerians of adequate power.”

When asked about the level of responses shown by the distribution companies to their expected submission of Letters of Credit (L/C) and monthly remittance to the market operator, Wonodi said: “Currently, we have about  eight of the distribution companies that have posted their LCs which shows that they are comfortable and confident that this market can take off the way it was designed to be.

Like in the beginning of the TEM, that is why we have these bank guarantees from the distribution companies saying to us that they commit to making their payments and if they do not, we fall back on these guarantees, we expect that market should go the way it should go.”




– This Day

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