The Nigerian Electricity Regulatory Commission (NERC) has terminated the involvement of the Nigerian Bulk Electricity Trading Plc in transactions between distribution companies and power producers concerning the purchase of electricity.
In its new order on the Transition of Bilateral Trading in the Nigerian Electricity Supply Industry released on Friday, NERC stated that distribution companies (Discos) can now purchase electricity directly from generation companies (Gencos) without NBET acting as an intermediary.
Advantages of the above policy;-
-Electricity generation and distribution will now become more predictable
-Removing NBET( as the government owned intermediary) , will help inject the needed liquidity at the generation and distribution end.
It will limit government fiscal exposure ( Save FG some money ).
Foster a competitive market by moving away from a sole bulk electricity trader in NESI which may eventually bring prices down
Allow GenCos with “take-and-pay” contracts to trade directly with DisCos which will increase efficiency at the distribution end as discos will be forced to either pay for a “minimum volume of electricity generation” or leave it.
It will also help improve efficiency in the transmission of electricity.
Helps move towards “take-or-pay” contracts for predictability and market discipline.
Bilateral trading contracts agreement for electricity :-
Take and pay :- Discos pay for power generation upfront.
Take or pay:- Discos will still be obligated to pay for power generation even if it cannot accept it or distribute it.
