Discos, Gen. Biz, Government

Big Companies can now buy Power Directly from Gencos- Fashola

Posted: May 22, 2017 at 1:10 pm   /   by   /   comments (0)

Things would start looking up for electricity consumers in Nigeria as the Minister of Power, Works and Housing, Mr Babatunde Fashola has eventually declared the commencement of the much dreaded Eligibility Customer operation in the power sector. Eligibility customer operation is a scheme envisaged by the Power Sector Reform Act, 2005, where in some categories of customers can choose to buy power from any power generating company of their choice on bi-lateral agreement.

Minister of Power, Works & Housing

Minister of Power, Works & Housing

The power distribution companies have through their association resisted the declaration, asserting that the electricity market was not ripe for the declaration and also that if it is declared the Discos would suffer grievous loss of revenue.

However, supporters of the declaration opine that the commencement of the program would improve liquidity and discipline in the market and also encourage the generating stations to produce more power.

According to the release from the industry regulator, NERC, the Honourable Minister of Power, Works & Housing, Mr. Babatunde Fashola, had on May 15, 2017, declared four categories of eligible customers in the Nigerian Electricity Supply Industry (NESI). The declaration which permits electricity customers to buy power directly from the generation companies is in line with the provisions of Section 27 of the Electric Power Sector Reform Act 2005 whereby eligible customers are permitted to buy power from a licensee other than electricity distribution companies.

The details of the eligible customers are as follows: the first category of eligible customers comprises of a group of end-users registered with the Commission whose consumption is no less than 2MWhr/h and connected to a metered 11kV or 33kV delivery point on the distribution network and subject to a distribution use of system agreement for the delivery of electrical energy. The next category of eligible customers are those connected to a metered 132kV or 330kV delivery point on the transmission network under a transmission use of system agreement for connection and delivery of energy.

Other category of customers under the declaration consists of those with consumption in excess of 2MWhr/h on monthly basis and connected directly to a metered 33kV delivery point on the transmission network under a transmission use of system agreement. Eligible customers in this category must have entered into a bilateral agreement with the distribution licensee licensed to operate in the location, for the construction, installation and operation of a distribution system for connection to the 33kV delivery point.

The last category are eligible customers whose minimum consumption is more than 2MWhr/h over a period of one month and directly connected to the metering facility of a generation company, and has entered into a bilateral agreement for the construction and operation of a distribution line with the distribution licensee licensed to operate in the location.

The new policy directive is expected to bring into play new and stranded generation capacities which may be contracted between generation companies and eligible customers. The declaration further provides that at least 20% of the generation capacity added by the existing or prospective generation licensee to supply eligible customer must be above the requirement of the eligible customer and is supplied under a contract with a distribution or trading licensee at a price not exceeding the average wholesale price being charged electricity distribution companies by the Nigerian Bulk Electricity Trader Ltd. The conditions for the declaration of eligible customer is subject to review by the Nigerian Electricity Regulatory Commission from time to time.

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