NBET to go by 2024 - Power Minister reaffirms

Solomon Ezeme

The Federal Government has reaffirmed its commitment to phasing out the Nigerian Bulk Electricity Trading company (NBET) from the Nigerian Electricity Supply Industry(NESI) by 2024, to give way for the effective implementation of the medium term electricity market regime.

This was restated by Engr. Abubakar Aliyu, Minister of Power at the power dialogue themed: “NESI: Progress Report and Outlook”, co-hosted by the Electricity Hub and Nextier Power in Abuja on Tuesday.

Recall NBET was created to sit between the different private sector participants in the privatised power market.

However the Minister said the exit plan of NBET is sequel to the expiration of previous purchase and resale licenses issued by Nigerian Electricity Regulatory Commission (NERC) to the agency on November 15, 2011, for the maximum statutory tenure of 10 years.

He said the government has issued a bulk electricity purchase and resale licence to the NBET to run for only three(3) tenure.

EnergyDay gathered that with less than three years to go for the new licence, NBET is under obligations to phase out the conditions precedent to bilateral contracts between willing buyers and willing sellers in the electricity market.

The market is therefore expected to move into the Medium term regime for NESI in the form of a fully competitive wholesale electricity market. This would thereby give way for increased competition in generation, centrally administered balancing mechanism for the wholesale electricity market and some retail competition.

The departure of NBET will lead to a “bilateral” market where GenCos will depend directly on revenue raising of individual DISCOs for payment.

Stakeholders in the power sector have suggested the removal of the agency, stating that the GenCos should be allowed to deal directly with DisCos, to ensure efficiency.

The major players indicted NBET of struggling to settle invoices of GenCos for energy purchased. They said the agency has been unable to fully recover receipts from DisCos, despite having executed firm vesting contracts with them.

It is not certain though if NERC will institute a transitional process for open trading of electricity between the GenCos and DisCos, prior to the final exit of NBET.

The country’s electricity market is undergoing structural reforms , with emphasis on competitive environment and the exit of bureaucratic bottlenecks , as proved by NBET.