Operators in Nigeria’s electricity market have called for harmonization of the trading currency used in the market to reflect uniformity in payment terms for services rendered and contracts entered into.
According to the communiqué of a meeting convened by the Market Operator (MO) department of the Transmission Company of Nigeria (TCN), the operators want every transaction, such as tariff, payment for gas and energy supplied to be denominated in one single currency as against the existing practice of paying for gas in dollars and other services in naira.
The communiqué also revealed that the 11 electricity distribution companies (Discos) also called on the National Assembly to pass a law that would set up a special court to swiftly adjudicate cases of electricity theft in the country.
The meeting was part of the MO’s quarterly activities aimed at developing the electricity market. It had in attendance, the electricity generation companies (Gencos), Discos, TCN, Nigerian Bulk Electricity Trader (NBET), Bureau for Public Enterprise (BPE) and Nigerian Electricity Regulatory Commission (NERC); amongst others.
According to the communique, the Gencos also declared that they have the capacity to generate up to 8,500 megawatts (MW) of electricity and thus requested that the transmission and distribution capacities of the Discos and TCN be improved on to accommodate that.
The Gencos, it explained equally called for the centralisation of market collections and appropriate disbursement of revenue based on agreed percentages.
Additionally, the Gencos requested for the activation of their existing contracts with the NBET and denomination of gas price in naira as it agrees with the call from Discos for harmonisation of currency for all transactions in the market.
“Gencos called for alignment of market payment with the gas payment cycle. The Gencos also demanded for a payment mechanism for the outstanding N504 billion. Discos on their part, called for implementation of the last tariff review for the end users. They also called for immediate payment of MDAs outstanding debts in order to improve liquidity in the market as well as a holistic approach of addressing the sector challenges not only the upstream.
According to the communique, the Discos and TCN called for cost-reflective tariff that assumes no borrowing.
However, it was noted that tariff reviews should be based on proper tariff studies taking into consideration all possible impacts.
The communiqué added: “Discos called for subsidy in the market to support purchasing power of the population, and that government should remember to redeem her earlier promise of the N100 billion subsidy.”
On electricity theft, which has reportedly become a prevalent challenge for the Discos, which called for legislative action or backing to address cases of electricity theft and delinquent customers through the introduction of special electricity courts which will have time limit to address disputes and issues of delinquent customers. “Delinquent customers should be made to pay interest on their outstanding bills”, they stressed.
The Discos equally called for the addition of their revenue shortfalls as a regulatory asset with the NERC, as well as a restructuring of the Central Bank of Nigeria (CBN) loan repayments so that some money can be freed to address liquidity challenges in the sector.
“Intervention (political, regulatory or even legislative) in the market will be required to kick-start improvements in liquidity that is self-sustaining, however, such intervention must be targeted i.e. tied to projects with predictable impacts. MO and NERC should be mandated to enforce full compliance of the market rules and sanction noncompliance.
ATC&C losses should be transparently monitored and reported. It was noted that increase in electricity generation need not be encouraged without significant improvement in loss reduction. Transmission Service Provider (TSP) should have clear Service Level Agreements with Discos and Gencos for effective service delivery,” it added on what was required to get the market back to stable productivity,” the communiqué explained.