The Nigerian Electricity Regulatory Commission (NERC) is by Section 32 (1) (a) of the Electric Power Sector Reform (EPSR) Act, 2005 mandated to create, promote and preserve efficient industry and market structures and to ensure the optimal utilization of resources for the provision of electricity services. Sections 32 (2) (a) and (d) also provide for the Commission to promote competition and private sector participation; and license and regulate persons engaged in the generation, transmission, system operation, distribution and trading of electricity.
NERC has so far issued over 40 licences to potential Independent Power Producers for the supply of new electricity on-grid generation capacity of more than 10,000MW. All the proposals were unsolicited, and the resulting cost to the Nigerian power system and the consumer could be significant and perhaps unacceptable if this un-orderly approach continues.
In order to avert such costs both to the Nigerian Electricity Supply Industry (NESI) and the Nigerian consumer, NERC seeks to evolve towards the procurement framework already mandated in the Market Rules for the Transitional and Medium Term Stages of the Nigerian Electrical Power Sector, 2010, brought into effect by Presidential order in February 2009. Rule 22.2.2 of the Market Rules states:
“….the Commission shall define procurement procedures or regulations to govern the competitive process and amongst other things, ensure transparency and selection of the least cost alternative. The special trader must comply with these procedures in the design, implementation and execution of the procurement documents and award of the relevant power procurement contracts”
Accordingly, NERC has developed a framework comprising guidelines and regulations to govern bulk electricity generation procurement. This framework establishes a systematic, transparent and competitive process for procuring additional electric generation capacity at least cost to consumers.
The proposed procurement framework focuses on the role of the bulk or special trader (now established as Nigeria Bulk Electricity Trading Plc) and on the distribution licensees who are authorized to procure electricity via bilateral power purchase agreements.
The formal rules for the procurement process are set out in the draft NERC Regulations for the Procurement of Generation Capacity 2012, while the draft Generation Procurement Guidelines provide explanations and guidance on a number of issues that are incidental to the application of the Regulations.
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One of the many objectives of this framework is to facilitate the involvement of the private sector in the provision of generation capacity to a buyer on the basis of rules that provide certainty, transparency and fairness of the procurement process and its outcome.
Comments and observations are hereby invited from all stakeholders and members of the public on the draft guidelines and regulations.
Notice is hereby given to the general public to send in their comments to the Commission within 30 days of this publication to:
Nigerian Electricity Regulatory Commission
Adamawa Plaza, Plot 1099 1st Avenue
Off Shehu Shagari Way,
Central Business District, Abuja
cc: Mr. Eyo Ekpo (Commissioner; Market Competition and Rates Division)
For further information, please contact: