Power sector set to experience boom with ongoing reforms – NBET CEO
Story from Abah ADAH, Abuja
Managing Director/Chief Executive Officer (MD/CEO) of the Nigerian Bulk Electricity Trading Plc (NBET), Dr Nnaemeka Ewelukwa, has stated that the Nigerian Electricity Supply Industry (NESI) will in no distant time witness tremendous growth courtesy of the current reforms being implemented by the federal government.
Dr Ewelukwa stated this in a presentation he made at a workshop organised recently for media and civil society members in Lagos, titled: “Building Knowledge and Plugging Skills Gap in Power Sector Reporting”.
According to him, “the agency, which just got a three-year licence renewal, was optimistic that the sector would soon experience tremendous growth based on key steps being taken by the President Muhammadu Buhari-led administration.”
Ewelukwa likened the scenario in the power sector now to what obtains in construction whereby so much work has to be done underground before the noticeable structure on top can be built successfully, saying the reform is laying a solid foundation that would give birth to a vibrant electricity market in the country any time soon.
He said NBET on its own part has robust strategies in place to increase power generation while optimising the electricity market.
According to him, part of the strategies was the continuous engagements the agency had with the Nigerian Electricity Regulatory Commission (NERC) to develop a framework targeted at raising electricity generation and reducing the risks that came with having more active Power Purchase Agreements (PPA).
“We are working with NERC to track those things that need to happen in order to increase capacity availability from the existing power plants, and that includes looking at the issue of: do they have funds for gas supply agreements? If they don’t have, how will they have funds for gas supply agreements?”
On how PPAs of GenCos can become more effective, the NBET boss said, “On the issue of PPAs not working, I mentioned that NBET is working with NERC to actually ensure that the Service-Based Tariff (SBT) regime is actually made effective so that the DisCos can be held to account.”
Part of the reforms, he said, was the Siemens power project that was being aggressively pursued.
He said, “Phase one seeks to achieve 7,000 megawatts, and that is why I will encourage you to, beyond this meeting, have engagements. But what I can tell you is that the government is committed towards achieving these reforms as quickly as possible.”
Stating that market facilitation is the core work of NBET, Dr Ewelukwa said, “NBET is now at the point of saying to the DisCos, we have handled this purchases from GenCos on your behalf but it is getting to the point that you need to stand on your own.
“And the different things that we been doing is geared towards getting the market to the point of self-sustainability where market forces control the demand and supply of electricity.
“And of course, the second component of it is the need to phase out public funding and guarantees. If you want to invest in the power sector, you should be looking at the market not guarantee instruments. Because though the positive side of guarantees is to stimulate but the negative side is that it makes people relax.
“So, the government has shown the commitment and clear desire to boost the electricity market by initially making some guarantee instruments available. But ultimately, for this market to succeed, the public funding and guarantees need to be gradually phased out of this market so that the market will start thriving on its own.
“The whole ultimate object of the law (Electric Power Sector Reform Act, EPSRA, 2005) is to have a competitive electricity market that runs on its own without the need for the government to be there.”
The NBET boss said there existed a far-reaching mismatch between the national peak demand forecast of about 19,788 MW and the peak generation at the moment, which the federal government is seeking to bridge through the reforms to build a technically robust Nigerian Electricity Supply Industry (NESI).
The Nigerian Bulk Electricity Trading Plc (NBET), also known as the Bulk Trader, is a wholly Federal Government of Nigeria (FGN) owned company incorporated on July 29, 2010, as part of the roadmap for Power sector reform towards the full implementation of the Electric Power Sector Reform Act (EPSRA) 2005.
NBET enters into power purchase agreements with generation companies and resells power to distribution companies through vesting contracts. To fulfil its mandate and drive investment into Nigeria’s power sector, NBET is positioned as a credit-worthy counterpart for current and future generation projects.
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