NBET Says Nigeria Electricity Market Soon To Thrive Without Public Fundings, Guarantee Instruments

The Nigeria electricity market will soon be free from public fundings and guarantee instruments to allow the market thrive on its own with forces of demand and supply as determinants.

The Managing Director of Nigeria Bulk Electricity Trading Plc ( NBET) dropped the hint while making presentations at a just concluded two-day capacity building workshop for Power Correspondents Association of Nigeria and Civil Society Organizations. The theme of the workshop held in Lagos is “Building Knowledge and plugging skills gap in power sector reporting”.

Making presentations, the NBET managing Director and Chief Executive Officer, Dr. Nnaemeka Ewelukwa, who noted that the Federal government has shown good faith and commitment in boosting the power sector, however said that time was running out for removal of public fundings and guarantees to allow the forces of demand and supply to dictate the electricity market.

According to the NBET Managing Director, “NBET mandate implementation which is market facilitation is the core work of NBET. NBET is now at the pointing of saying to the DisCos, we have handled this purchases from Gencos on your behalf but it is getting to the point that you need to stand on your own.

“And the different things that we been doing is geared towards getting the market to the point of self sustainability where market forces control the demand and supply of electricity.

“And of course the second component of it, is the need to phase out public funding and guarantees. If you want to invest in the power sector, you should be looking at the market not guarantee instruments. Because though the positive side of guarantees is to stimulate something but the negative side is that it makes people to relax.

“So, the government has shown good faith, the government has shown commitment, the government has shown a clear desire to boost electricity market by initially making some guarantee instruments available. But ultimately, for this market to succeed, the public funding and guarantees need to be gradually phased out of this market so that the market will start thriving on its own.”

On the Road Map of power sector reform, he recalled that by 2010, the need for the road map came up and was passed as a policy document to revamp the power sector.

Dr. Ewelukwa explained that NBET is an institution carefully set up by Government with different competencies factored into the circle of the company and that it is a private functioning agency that is adding value to the Electricity market.

He said that the power sector reform act made provision for transfer of management and financing of industry operations to the private sector. 

In his words, some of the objectives of passing the Act include: “To increase access to electricity services with improved efficiency, affordability, reliability and quality of services. That’s what actually led to the creation of NERC under the Power Sector Reform Act.

“To encourage better investment into the sector to stimulate economic growth and this is what led to NBET being established. 

“And to build a competitive electricity market and this is the end goal where you don’t need government holding GenCos, DisCos, NBET. The whole ultimate object of the law is to have a competitive electricity market that runs on its own without the need for the government to be there.”