- The NBET energy trading initiative would significantly boost the long-awaited willing buyer-willing seller electricity market regime.
- NBET is transitioning into an entity that provides an electronic platform where buyers and sellers of power can meet and transact business.
The federal government has approved the transition process for the Nigerian Bulk Electricity Trading Plc (NBET) into an energy commodity exchange or energy trading platform. The Managing Director of NBET, Dr Nnaemeka Ewelukwa, disclosed this during an exclusive interview with THISDAY in Abuja.
According to the NBET MD, NBET is stepping up the process of transforming from being a trader of electricity to an energy commodity exchange with the core function of facilitating the buying and selling of electricity in the country.
Ewelukwa revealed that the energy exchange initiative would significantly boost the long-awaited willing buyer-willing seller electricity market regime.
This model is similar to what is obtained in India, where the country has the India Electricity Exchange (IEX) established as an entity that solely facilitates the buying and selling of energy products and rakes huge revenues for the government in the process.
Incorporated on July 29, 2010, as part of the roadmap for power sector reform towards the full implementation of the Electric Power Sector Reform Act (EPSRA), NBET commenced operation in 2011 as the manager and administrator of the electricity pool in the Nigerian electricity supply industry (NESI).
It commenced trading in the electricity market at the start of the Transitional Electricity Market (TEM) regime in February 2015. To date, NBET buys electricity from generation companies (Gencos) through Power Purchase Agreements (PPAs) signed with them.
The bulk trader resells the electricity bought to distribution companies (Discos) through Vesting Contracts signed with the 11 Discos and settles invoices received from Gencos, Discos and gas suppliers. The company also disburses electricity subsidy funds from the federal government to the sector players, among other statutory mandates.
However, Ewelukwa said the transmuting of NBET to an energy exchange would revolutionise the power sector by making it easier for the federal government to hand off its direct role in the sector and become more of a facilitator.
The NBET boss explained, “At the moment, NBET is working on a critical initiative that would be a major boost to a willing buyer, willing seller arrangement.
“The former board of directors of the company under the leadership of the Minister of Finance, Budget and National Planning had approved for NBET to start the process of transforming into an energy exchange or an energy trading platform.
“So, the whole idea is that NBET is transitioning from being a buyer and seller of power to an entity providing an electronic platform where buyers and sellers of power can meet and transact business. It’s an initiative we are working on, and we are confident it will be successfully implemented. It’s essentially a commodity exchange.
“If you look at it, electricity is actually a commodity, and whether thinking about commodity in terms of agricultural products or you are thinking about power, it’s still the same fundamentals. They are goods that need to move from point A to point B.
“So, there is a need for a physical network that enables the goods to move from point A to point B. That physical network may have some challenges here and there. How do you address those challenges? And so, it’s a process that we are working on.
“We believe that it would revolutionise the power sector in many ways in terms of making it much easier for the federal government to ease out of a direct role in the sector and become more of a facilitator, which is the original design of the power sector process and the electricity market.”