By May this year, it will be two years since Babatunde Fashola, minister of Power, Works and Housing, declared the eligible customer regulation which allows consumers of electricity above 2MW to buy power directly from generation companies, but many customers are yet to benefit from the regulation.
The sector regulator, the Nigerian Electricity Regulatory Commission (NERC), said in its latest quarterly report it received three new applications in the third quarter of 2018, apart from the 11 existing applications which were under ‘technical evaluation’.
BusinessDay analysis shows that investments into a total of 248MW new capacity have stalled. This is half the power Ikeja DisCo receives daily to power its franchise areas in parts of Lagos including Abule Egba, Akowonjo, Ikeja, Ikorodu, Oshodi and Shomolu.
According to NERC, applications have stalled because applicants did not produce evidence of excess capacity that the plant can sell to the eligible customer beyond the already contracted capacity with the Nigerian Bulk Electricity Trading company (NBET) which settles debt in the market.
NERC also said applications have been refused because some applicants lack executed Transmitted Use of System (TUoS). This refers to the charges incurred for transmitting electricity across the national grid network from the source of generation to the network of the local distribution company, including transmission losses.
NERC also said that some applicants did not show a letter of no indebtedness to the electricity distribution company (DisCo) allocated the franchise area.
“This is why I argued that the Nigerian Electricity Supply Industry (NESI) is not mature for an electricity market,” said Idowu Oyebanjo, a UK-based chartered power systems engineer.
Oyebanjo said the NERC should have updated the EPSRA 2005 to reflect the obligations of licensees in relation to the declaration. By extension, relevant grid codes (transmission and distribution codes), standards, manuals and policies have to be updated.
“Aside from these, it must be anticipated that some players will be involved in anti-competitive acts to frustrate the implementation of the eligible customer regime and so a separate code of practice is required to forestall this and facilitate the smooth transition into retail competition,” said Oyebanjo.
When the policy was announced, there was palpable excitement in the air as analysts believed that industries would latch onto the policy and better their output. According to the Manufacturers Association of Nigeria (MAN), 40 percent of all expenses of manufacturing firms goes into powering their machines. The eligible customer regime was meant to cut down on this cost.
Fashola, at the 29th monthly power sector meeting in August last year, had said that 26 industrial customers were seeking to benefit from the eligible customer declaration. The meeting was hosted by Mainstream Energy (concessionaires of Kainji and Jebba Hydro-Power Stations) in Niger State.
“From reports reaching me, five industrial customers are now benefitting from the policy and taking their power directly from a GenCo, who incidentally is our host today, Messrs Mainstream Energy Ltd. We also have a list of 26 (twenty-six) industrial customers who are seeking to benefit from the policy,” Fashola had said.
Months later, these industrial customers are still waiting to benefit from the policy. The policy directive was expected to bring into play new and stranded generation capacities which may be contracted between generation companies and eligible customers.
The declaration further provides that at least 20 percent of the generation capacity added by the existing or prospective generation licensee to supply eligible customer must be above the requirement of the eligible customer and must be supplied under a contract with a distribution or trading licensee at a price not exceeding the average wholesale price being charged DisCos by the Nigerian Bulk Electricity Trader Ltd.
Fashola had directed NERC to enforce transition charge on eligible customers to compensate DisCos for revenue loss arising from their customers buying power directly from generation companies. But even this has not enabled the programme to work.
ISAAC ANYAOGU
