Oscarline Onwuemenyi
02 June 2017, Sweetcrude, Abuja – Electricity generation companies (GenCos) have commended the recent declaration of eligible customers by the Minister of Power, Works and Housing, Mr. Babatunde Fashola, saying it will engender productive competition in the area electricity market that will ultimately boost liquidity and guarantee direct access to power by all.
The Executive Secretary, Association of Power Generation Companies (APGC), Dr. Joy Ogaji at a briefing in Abuja yesterday said with the declaration, bulk customers who are in need of power can procure it directly from the GenCos without having to wait for the distribution companies (DisCos) especially where they are not forthcoming.
She said under the arrangement, DisCos can also stand as eligible customers by buying power directly from any GenCo at their convenient should the conventional source of daily allocation of supply for their franchise areas become insufficient to cater for their customers, thus brewing confidence in constant supply.
“DisCos are actually able to get power through this arrangement on the grid. Those DisCos who are willing to get additional power qualify as Eligible Customers as well.
“If they have more customers and are not getting enough due to the strict national grid allocation, they can ask for extra power. In that case, a DisCo will need a bilateral contract not with the Nigerian Bulk Electricity Trading Plc (NBET) but with a GenCo, and the Transmission Company of Nigeria being the third party,” she explained.
The APGC spokesperson said the declaration will boost liquidity in the power sector and stimulate more competition for the DisCos, the Transmission Company of Nigeria (TCN) and the GenCos to serve customers for the better.
The eligible customer directive is yet to commence as she said the Nigerian Electricity Regulatory Commission (NERC) is working on the framework that that will address registration process, tariff setting among others.
She said, “Declaring the Eligible Customers does not mean it is only the GenCos and DisCos that must become competitive, even the TCN has to become competitive and deliver on the contract. When TCN defaults by not wheeling my available capacities, it will be held liable.
“It is going to be a contractual framework because NERC is not part of the activity. NERC will only register the participants after they meet the requirements which it is working on,” Ogaji said.
APGC also confirmed that GenCos now operate fewer turbines to generate power base on the quantum of gas that they can pay for.
Speaking on gas challenges faced by the Gencos, Dr. Ogaji said, “To procure gas, we need money. Currently, GenCos are being owed N600 million and we owe gas companies nearly N200million.
“Most gas suppliers now do pay-before-service and the electricity market is only remitting about 30 per cent. Most of the GenCos can’t operate all their machines; it depends on what they can pay. We are in that state, a precarious and pitiable one,” she lamented.
“This contract will be watertight that eligible customers must put down a bank guarantee that shows they are capable of paying for energy. In the contract, it will capture that the GenCo must be able to deliver the energy quantum whether there is gas or hydro constraint. TCN must also ensure it must transmit and if cant, it must pay for damages or penalties.”
