The Nigerian Electricity Regulatory Commission (NERC) has issued an order directing the Nigerian Bulk Electricity Trading Plc (NBET) to stop entering into new contracts for the purchase and resale of electricity and ancillary services in the Nigerian Electricity Supply Industry (NESI).
The order, effective from 25 July, allows electricity distribution companies (DisCos) to purchase electricity directly from generation companies (GenCos) without NBET acting as an intermediary.
NERC stated that any contract executed by NBET in violation of this order will not be approved and will be subject to regulatory sanction. However, NBET will continue to administer the fully effective contracts with five generation companies, namely Azura Power West Africa Ltd, Omotosho Power Plc, Olorunsogo Power Plc, Nigerian Agip Oil Company Ltd, and Shell Petroleum Development Company of Nigeria Ltd, based on the minimum “take or pay” capacities in their respective Power Purchase Agreements (PPAs).
The capacity from these five plants will be vested to DisCos based on the guaranteed share of capacity in their respective vesting contracts. Other power plants with “take and pay” PPAs or interim energy sales agreements with NBET have been granted 60 days to negotiate and contract with DisCos on a bilateral agreement basis for the capacity currently with NBET.
This development comes amidst speculations that the administration of President Bola Tinubu may be considering the dissolution of NBET following the expiry of its current operating licence. The Minister of Power, Adebayo Adelabu, declined to renew the tenure of the current Managing Director/CEO of the company, Nnaemeka Ewelukwa, and directed him to hand over to the most senior general manager by 24 July.
NBET, incorporated on 29 July 2010 and fully owned by the federal government, acts as the principal purchaser of electricity from generating companies and serves as the “manager and administrator of the electricity pool” within the power industry. The company’s initial 10-year licence expired in November 2021, and NERC extended its operating licence for an additional three years, set to expire in November.