Is electricity supply industry ready for NBET’s exit?

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NBET,NERC

The Nigerian electricity landscape has been undergoing significant transformations in alignment with the country’s goal of promoting

a competitive national electricity market.

In anticipation of NESI’s impending transition to a medium-term electricity market stage, the National Electricity Regulatory Commission is empowered to issue directives instructing NBET to cease entering into new agreements and transfer existing NBET contracts to other duly licensed entities. This directive reflects the evolving landscape of the Nigerian electricity market, emphasising the need for increased competition and private sector participation.

In any case, legal considerations further complicate the discussion surrounding the NBET’s novation process. Section 7 of the EA mandates NBET to transfer its contractual rights and obligations to other licensed entities upon NERC’s directive. However, ambiguity persists regarding the identity of these “other licensees” and the criteria for their selection. Clarifying these aspects ensures a smooth transition and minimises market disruptions.

Furthermore, there are conditions precedent stated in sections 7– of the Electricity Act that NERC has to ensure it satisfies before the proposed NBET winding down and utilisation of its authority under Section 7 of the Electricity Act. Additionally, there must be adherence to the conditions precedent for declaring a medium-term market stage, as outlined in Appendix 1 of the Market Rules for Transitional and Medium-Term Stages of the Nigerian Electricity Supply Industry 2014.

The suitability of this choice depends on each state’s unique circumstances and should emphasise the need for tailored approaches to electricity market development or design. Kogi State governor, Ahmed Usman Ododo, recently visited President Bola Tinubu at the presidential villa, Abuja, about the spate of insecurity in his state and solicited support from the president to curb the trend.

 

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