Nigeria Electricity Regulatory Commission (NERC) has directed the Nigeria Bulk Electricity Trading (NBET) company to immediately stop entering into new contracts for the purchase and sale of electricity in the Nigerian Electricity Supply Industry (NESI).
Gatekeepers News reports that this move is aimed at reducing the Federal Government’s financial risks and creating a more competitive market.
According to an Order signed by NERC Chairman, Sanusi Garba, and Commissioner for Legal, Licensing, and Compliance, Dafe Akpeneye, NBET’s role will be limited to administering existing contracts with five generation companies (GenCos) listed in Table 1.
The Order states that any new contracts executed by NBET in violation of this directive will not be approved and will be subject to regulatory sanction.
The new initiative allows Electricity Distribution Companies (DisCos) to purchase electricity directly from GenCos without NBET acting as an intermediary.
NERC’s objectives include encouraging direct energy contracts, creating a more competitive market, and shifting bulk energy trading contracts to “take-or-pay” agreements to increase certainty and discipline among market participants.
As stated in the Order, “NBET shall forthwith cease to enter into new contracts for the purchase and resale of electricity and ancillary services in NESI. Any contract executed by NBET in violation of this Order shall not be approved by the Commission and shall be treated as an infraction that is subject to regulatory sanction.”
