18 March 2014, Abuja – The Federal Government, Monday gave indications that it has suspended the planned implementation of the Transitional Electricity Market, TEM, indefinitelyas it disclosed that it is not concerned about the declaration of TEM, but is instead bothered about putting the right market conditions in place for the sector to thrive.
The Federal Government also disclosed that there are no plans to remove the N700 fixed electricity charge per customer, in the next couple of years, saying that Nigerians will continue to pay the charges irrespective of whether there is power supply or not.
Speaking at the Nigeria Power Conference in Abuja, Mr. Chinedu Nebo, Minister of Power, declared that the new owners of the distribution companies (Discos) of the defunct Power Holding Company of Nigeria, PHCN, are responsible for the delay in the declaration of the Transitional Electricity Market, TEM.
According to him, the new owners of the distribution companies needed to be sure of their ability to recoup their investment, especially through revenue collection.
The TEM was initially slated to commence, March 1, 2014, after the initial postponement last year. The postponement was due to the fact that certain conditions were not met.
Some of the conditions which were expected to be met during the interim period between the completion of the privatisation process and the start of TEM, include the execution of the market participation agreement, market operations system regulations, market settlement system, and the procedures for registration and admission processes for market participants.
The Electric Power Sector Reform Act (EPSRA) 2005 established three market stages that define gradual competitiveness in the power privatisation market, which include TEM, mid-term electricity market and final/mature electricity market.
The TEM stage represents the intermediate step to move the electricity market in an orderly manner from an integrated whole utility to a fully competitive market structure with more differentiated players.
Nebo further blamed the delay in the implementation of the TEM on challenges in gas supply, inadequate transmission network and security challenges, especially in the protection of power installations and facilities.
Also speaking, Mr. Benjamin Dikki, Director General, Bureau for Public Enterprises, BPE, said TEM implementation is being delayed by the level of power supply, revenue collection by distribution companies and issues surrounding payment of certain amounts by Discos to the Nigerian Electricity Regulation Commission, NERC.
…Stands firm on N700 fixed charge
On his own part, Mr. Sam Amadi, Chief Executive Officer, Nigerian Electricity Regulation Commission, NERC, said the Federal Government is not fixated on TEM, but with conditions in the market.
He said that the introduction of the N700 fixed charge is to protect the new owners of the privatised assets, who he said might lose their investments if the charges are not introduced.
According to him, that is how the business is done, and this is how investors are assured of recouping their investments in the running of the companies and in facilities upgrade.
He, however, apologised to Nigerians for the erratic power situation, saying that the Federal Government is working to bring about an increase in power supply.
Amadi maintained that the new investors needed time to test-run the facilities and the market, saying that the interim process is needed to enable the government create a level playing field, so that the investors will come to terms with conditions of the market.
Also, Managing Director, Nigerian Bulk Electricity Trading Plc, Mr. Rumundaka Wonodi, said TEM will only come when everything is put under control, adding that the Federal Government will not have to wait for the implementation of the TEM before steering the electricity market to great heights.
FG to sell stake in power assets via IPO in 2017
Also, Benjamin Dikki, Director General of the BPE, disclosed that the Federal Government’s stake in the privatised distribution and generation companies, will be sold through an Initial Public Officer, IPO, on the Nigerian capital market, by 2017.
He, however, noted that in addition to the investing public, some states in the country will be given some stakes in the power facilities when the Federal Government decides to sell its stake.
He said, “We have to allow them two or three years of operations so that they can produce the necessary financial statement and operational reports, that people can look at and rely on for investment.
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