Reliable sources in the Nigerian Electricity Regulation Commission, NERC, have revealed that the Federal Government of Nigeria is set to commence the full implementation of the Eligible Customers policy by next week starting Monday November 6, 2017.
It will be recalled that the Honorable Minister for Power, Mr. Babatunde Fasola, had on May 15, 2017 announced the official declaration of Eligible Customers in line with the provision of the Electric Power Sector Reform Act 2005 whereby certain classes of customers are permitted to buy power from a licensee other than electricity distribution companies.
Who are Eligible Customers? And how will this latest policy really contribute to what an average electricity consumer in Nigeria desire, namely improved power supply?
Many analysts have been raising questions regarding the rationale behind this declaration. Most Nigerians who constitute the bulk of electricity consumers are also asking to know the effect and strategic advantage of the declaration and how this will lead to the improvement in power supply. This issues and concerns are being raised due to worsening electricity situation in the country in spite of huge billions of dollars that the sector has gulped since the beginning of the sector’s liberalization in 2001.
Eligible customers are classes of large electricity consumers that take power directly from the high voltage networks of the distribution and transmission grid. They qualify as eligible if their consumption is not less than 2MW of power at any time. In most cases these are industrial customers directly connected to the 11KV, 33KV, 132KV and 330KV networks, effectively excluding all residential customers on R2.
With the declaration, it is expected that industrial consumers of electricity can directly transact business with the GENCOs by buying and paying for energy from them rather than the DISCOs as presently happening. This is expected to bring about increase in energy and capacity to be traded in the industry, improved liquidity and market settlement.
For example, Ayodele Oni, a commercial lawyer and partner in a leading Nigerian law firm, commends the Minister for Power for this prompt declaration. He argues that the policy will expand more room for the sector to play a role in addressing the energy deficit. “It is apparent that Nigerians will pay for services/electricity supply, provided they see efficiency and a system that works and ensures they have electricity supply. The discerning investor can also, especially with viable partnerships, provide a viable alternative to the manufacturing sector and the informal sectors of the economy such that the costs of production and doing business generally reduce. Ultimately, there will be more enterprises, lower cost of living with better quality of life for more people because of the existence of more jobs”.
Industry operators, particularly in the generation sector, energy trading business, policy makers and regulators are of the opinion that the eligible customers policy will result in immense improvement in power supply in the country. They reason that the industry is presently suffering from a huge amount of stranded generation due to inability of most DISCOs to pay for the power they purchase from the GENCOs. With this policy, many private industries can enter into bilateral transaction with the GENCOs and directly buy power from them without fear of payment since they have the capacity to adequately pay. This will definitely improve the generation capacity of the GENCOs and stimulate further investments in the sector.
However, most DISOCs are already kicking against this policy as they fear it will dispossess them of their key customers group, that is, industrial and commercial customers, from whom they derive bulk revenue.
How the Eligible Customers Policy will eventually turn out for industry operators and Nigerians generally is what many may have to continue to watch out for in the coming days.