Application for power generating licenses now by competitive tender
Henceforth, applications for licenses to generate power in the Nigeria will be procured through competitive bidding according to new rules that the National Electricity Regulatory Commission (NERC) is proposing.
In a speech at the 2nd series of BusinessDay Future of Energy Conference held in Lagos today, the Commission said that it had issued over 100 licenses out of which 62 are for grid connected power but almost all were unsolicited. This means that investors make proposals and regulators issue licences when they meet conditions without considering their capacity to utilise them.
“But going forward, the competitive procurement regulation has been enacted by the Commission, therefore the Nigerian Bulk Electricity Trader (NBET) will now do competitive procurement for new generation and will be done taking cognisance of integrated planning study to know how much power we need, where and how will power be sourced, renewable or on grid,” said Olufunke Dinneh, general mgr, legal mgt and licensing who represented James Momoh, the Commission’s Vice Chairman.
The Commission said it will make certain that generation licences would actually be utilised and power generated would be bought that there is an off-taker as this will enhance investment decision and ensure licenses are used in the places where power is most needed.
To this end the commission said it has appointed the Japanese International Corporation to carry out a study of projected demand for electricity in Nigeria.
“It is important because it can help us do a forecast and integrated planning,” said Dinneh.
Experts agree that there was need to curtail the penchant of unutilised licenses but it is also important to protect private capita.
“I think competitive procurement is a way to go, the market is ripe but there are also capacities out there and projects yet undeveloped, we need to mop those projects, treat them as stranded assets, so that the private sector who has made the investment do not lose, we must have a to protect private capital. There is need to ensure projects are not just started and abandoned, there should be bankable documents that will help to ensure this,” said Rumundaka Wonodi, CEO, ZKJ Energy Partners Ltd.