Push for improved electricity grows as sector looks set for TEM

With efforts underway to ensure increased power generation in the country, the transitional electricity market (TEM), a stage that will ensure accountability and enhance further investment in the Nigerian electricity market, is expected to be declared in the third quarter of the year.

The Federal Government is making efforts to bring about more embedded generation and captive power, even as it is tackling the issues of gas supply and transmission network, said Beks Dagogo-Jack, chairman of the Presidential Task Force on Power (PTFP), at the policy dialogue on power organised by the Lagos Chambers of Commerce and Industry (LCCI) on Tuesday in Lagos.

Dagogo-Jack said the government has sourced $3 billion to invest in transmission network between now and 2018, adding that gas supply is expected to hit 3 billion standard cubic feet per day by 2020 and gas pricing will reach export parity by 2015 or latest by first quarter of 2016.

The TEM, which was originally scheduled to be declared on March 1, 2014, was put on hold to ensure that all the conditions precedent before it comes on stream are satisfied.

According to the PTFP chair, part of the reasons why the TEM was delayed was that the power generation had not reached the expected level. “Currently daily average power generated should be 4,875MWH/H. This has not been met. Unless the market can generate and wheel this amount of power, the market will have immediate issues achieving liquidity in the short term and solvency in the medium to long terms.”

Power generation in the country is still averaging 3,800 megawatts due to pipeline vandalism, he said, adding that there would be 10,000 megawatts constructed power by December 2015.

Stating that the Nigerian electricity market is the biggest in West Africa and will always attract funding, Dagogo-Jack stressed the need to create an enabling environment where risks are properly mitigated. “There is a gap to be served, and funding will always go to a place where there is a gap to be served.”

“Right now, what we have is not a proper electricity market. We are at the pre-transitional electricity market, where we cannot hold industry players accountable for power supply or lack of it,” said Dagogo-Jack. “The transitional electricity market is expected to kick off by the third quarter of the year. It will ensure that people fulfill their responsibilities as it is a fully disciplined sector. It is the only way external funding and new projects will come into the sector.”

But we have to wait for a level of market maturation before we bring in more liberalisation, he said, adding that “the minister of power is watching the market to know when to declare the TEM. The market is moving away from where it used to be to where it ought to be.”

The declaration of the TEM will kick-start a fully contracted and rules-governed electricity market wherein the sanctity of contracts shall be full to protect market liquidity and incentivise increased investment, he said.