BUSINESS DAY
Power distribution companies (DisCos) in Nigeria have been given the green light by the regulator to buy electricity directly from producers of the commodity after over 10 years of relying on an intermediary called the bulk trader.
The DisCos and the generation companies (GenCos) unbundled from the defunct Power Holding Company of Nigeria were privatised in 2013 and handed over to the core investors on Nov. 1 of that year, while the Transmission Company of Nigeria (TCN) has remained under government ownership.
The government-owned Nigerian Bulk Electricity Trading Plc (NBET) buys electricity in bulk from generation companies through power purchase agreements and sells through vesting contracts to the DisCos, which then supply it to the consumers. It began trading with commencement of the transactional electricity market in 2015.
The Nigerian Electricity Regulatory Commission (NERC) said in the Multi-Year Tariff Order 2024 that DisCos can now procure electricity directly from GenCos through bilateral contracts. Documents released by NERC showed that the tariff review applications of the 11 power distributions in the country included plans to exit NBET’s vesting contract regime.
The regulator said the new order recognises a revision to the DisCos’ partially contracted capacity (PCC) to ensure a minimum energy offtake with effect from 1st January 2024. The minimum energy offtake requirement for the 11 DisCos this year is 4,063MWh/h.
Connect with us on our socials: