- The new policy is expected to improve the power supply.
- NERC to hold GenCos and DisCos accountable for distribution.
A recent policy shift in the electricity sector, known as contract-based electricity administration, announced by the Minister of Power, Engineer Abubakar D. Aliyu, has given the sector new life, as it has bolstered electricity generation and distribution since July 1, 2022. The recent changes were prompted by the sector’s chaos, with the frequent failure of the national grid and the takeover of several Discos for failing to repay loans to banks, a clear indication that they had become insolvent.
Fidelity Bank Plc was forced to take over Benin, Kaduna, and Kano DisCos due to their failure to repay loans. At the same time, the Nigeria Electricity Regulatory Commission (NERC) and the Bureau of Public Enterprises (BPE) restructured and replaced the management of Port Harcourt and Ibadan DisCos, both of which were hit by a liquidity crisis and long-running battles with banks over loan repayment default.
The new regime, which went into effect on July 1, requires NERC to hold DisCos and GenCos accountable for electricity supply and distribution. Operators in the sector must adhere to the terms and conditions, which require at least 5,000MWh of electricity per day or face sanctions.
To address the liquidity concerns, the NERC stated that it was collaborating with the CBN to draw from an emergency electricity stabilization fund to increase the DisCos’ revenue capacity to pay monthly energy bills. As a result, the regulatory agency said, “The GenCos will now have more funds to increase gas supply to their power plants and improve energy generation for TCN to transmit. As it is now, TCN has no problem yet as it can wheel up to 5,000MW.
It won’t move the needle in power distribution. Costs recovery is not possible unless there is regularity in the power supply. Electricity is a highly perishable commodity, more so grid power supply where households and factories don’t give advanced notices to when they need power or how much they need.
However, a regular supply of power to supply clusters will make people adapt if they know when to expect light consistently in their area – it’s then cost recovery will improve
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