Eligible power consumers are now free to purchase electricity directly from power generation companies, the minister of power, works and housing, Babatunde Fashola, has said.
A statement by the Nigerian Electricity Regulatory Commission, NERC, on Friday stated that Mr. Fashola declared four categories of eligible customers in the Nigerian electricity supply industry on May 15.
The minister, who described the declaration as a major policy directive in the industry, according to the statement, empowered the consumer to buy electricity directly from licensees other than the power distribution companies.
Before the minister’s declaration, Nigerian electricity consumers got their supply from the power distribution companies, Discos.
“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 the electricity distribution companies,” the statement said.
In exercising the power conferred on him by the said Act, the minister directed the commission to permit four categories of customers to buy power directly from licensees other than electricity distribution companies.”
The first category of eligible customers, NERC noted, comprised of a group of consumers registered with the commission whose consumption was not less than two megawatts-hour/hour and connected to a metered 11 kV or 33 kV delivery point on the distribution network.
These customers must be subject to a distribution use of system agreement for the delivery of electrical energy.
The commission noted that another category of eligible customers are those connected to a metered 132 kV or 330 kV delivery point on the transmission network under a transmission use of system agreement for connection and delivery of energy.
Explaining further, NERC stated that, “Other category of customers under the declaration consists of those with consumption in excess of 2 MW hr/h on monthly basis and connected directly to a metered 33 kV 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 33 kV delivery point.”
The statement explained that the last category are eligible customers whose minimum consumption is more than 2 MWhr/h over a period of one month and directly connected to the metering facility of a generation company, and have 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 statement disclosed that the new policy directive would bring into play new and stranded generation capacities, which might be contracted between the generation companies and eligible customers.
NERC explained further that the declaration provides that at least 20 per cent of the generation capacity added by the existing or prospective generation licensees to supply eligible customers must be above the requirement of the eligible customers, noting that the supply shall be 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 Limited.
“The conditions for the declaration of eligible customer is subject to review by the Nigerian Electricity Regulatory Commission from time to time,” the statement added.
Earlier, Sunday Oduntan, spokesperson of the Association of Nigerian Electricity Distributors, had condemned the plan, noting that eligible customers “can be declared by the minister only when a competitive market exists in the Nigerian electricity supply industry.”
Mr. Oduntan also argued that the discos must be compensated for any reduction in their ability to earn permitted rates of return on their assets, as well as any inadequacy in their revenues as a result of the minister’s declaration.
“What this means is that consumers will have to suffer an increase in their electricity tariff to accommodate this premature declaration of eligible customers,” he had said.
Earlier, the minister had threatened to sanction the power firms over alleged breach of agreement and epileptic services.