Nigeria declares TEM in two weeks as defaulting Discos face penalties

In order to launch the Nigerian power sector into a commercially viable and technically sustainable electricity market, the long awaited Transitional Electricity Market (TEM) for the country will be declared in the next two weeks, Chinedu Nebo, the minister of power, has said.

According to him, “It is very feasible to declare TEM in the next two to six weeks.”

TEM represents an intermediate step towards an orderly electricity sector from an integrated whole utility to a fully privatised, competitive market structure with more differentiated players.

Its core essence is to ensure orderliness in the transition of the government led monopolistic and inefficient electricity market into a private sector driven and competitive one.

Some of the conditions precedent (CP) which must be met during the interim period between the completion of the privatisation process and the start of TEM include the execution of market participation agreements, market operations system regulations, market settlement system, and the procedures for registration and admission processes for market participants.

To this end, any power generating station that fails to deliver on its electricity generation commitments to the national grid as contained in power purchase agreements PPAs) signed with the Nigerian Bulk Electricity Trader (NBET) will be sanctioned, just as NBET would not be paid for power not supplied to the distribution companies that ultimately lose revenue for failing to supply improved electricity to households and businesses.

Nebo, who was speaking during the ministerial briefing on power, which was put together in collaboration with the Federal Ministry of Information, lamented the low level of electricity generation in the country which he said hovers around 3,500 megawatts, with peak generation of 4,600 megawatts in the last six weeks for a population of over 170 million people.