Peter Uzoho
The Nigerian Bulk Electricity Trading Plc (NBET) is stepping up the process of transforming from being a trader of electricity to an energy commodity exchange with core function of facilitating buying and selling of electricity in the country.
The model is similar to what obtains in India, where the country has the India Electricity Exchange (IEX) that was established as an entity that solely facilitates the buying and selling of energy products and raking huge revenues for the government in the process.
Managing Director of NBET, Dr. Nnaemeka Ewelukwa, disclosed this during an exclusive interview with THISDAY, in Abuja, saying when effected in Nigeria, the energy exchange would be a major boost to the long-awaited willing buyer-willing seller electricity market regime.
Ewelukwa, revealed that the federal government had approved for NBET to start the process of transforming into an energy exchange or an energy trading platform.
Incorporated on July 29, 2010, as part of the roadmap for power sector reform towards the full implementation of the Electric Power Sector Reform Act (EPSRA), NBET commenced operation in 2011 as the manager and administrator of the electricity pool in the Nigerian electricity supply industry (NESI).
It commenced trading in the electricity market at the start of the Transitional Electricity Market (TEM) regime in February 2015.
Till date, NBET is involved in the buying of electricity from generation companies (Gencos) through Power Purchase Agreements (PPAs) signed with them.
The bulk trader resells the electricity bought to distribution companies (Discos) through Vesting Contracts signed with the 11 Discos and settles invoices received from Gencos, Discos and gas suppliers. The company is also involved in the disbursement of electricity subsidy funds from the federal government to the sector players among other statutory mandates.
However, Ewelukwa said the transmuting of NBET to an energy exchange would revolutionalise the power sector by making it easier for the federal government to hands off its direct role in the sector and become more of a facilitator.
The NBET boss explained, “At the moment, NBET is working on a critical initiative that would actually be a major boost to willing buyer, willing seller arrangement.
“The former board of directors of the company under the leadership of the Minister of Finance, Budget and National Planning had approved for NBET to start the process of transforming into an energy exchange or an energy trading platform.
“So, the whole idea is that NBET transitioning from being a buyer and seller of power to being an entity that provides an electronic platform where buyers and sellers of power can meet and transact business. It’s an initiative we are working on and we are confident that it will be successfully implemented. It’s essentially a commodity exchange.
“If you look at it, electricity is actually a commodity and whether thinking about commodity in terms of agricultural products or you are thinking about power, it’s still the same fundamentals. They are goods that need to move from point A to point B.
“So, there is need for a physical network that enables the goods to move from point A to point B. That physical network may have some challenges here and there. How do you address those challenges? And so, it’s a process that we are working on.
“We believe that it would revolutionalise the power sector in many ways in terms of making it much easier for the federal government to actually ease out of a direct role in the sector and become more of a facilitator, which is really the original design of the power sector process and the electricity market.”
He said since its establishment, the agency had made considerable progress in delivering on its mandate as a sub-set of the electricity market.
According to him, NBET had transparently disbursed the electricity subsidy fund for the federal government, the Payment Assurance Facility and the World Bank Power Sector Recovery Loan.
He noted that the transparent disbursement of the funds in the sector was enabled by a rigorous process put in place by the agency for validating payments.
According to him, he and his team understand the sensitivity of the power sector and the need for accountability.
He added that rigorous system had stood the test of time because NBET as an institution was able to disburse those funds without a hint of impropriety in the payments.
“And so, that has engendered confidence amongst the sector participants. Sector participants may complain about the money not being enough and want to be paid more, and that government should make more funds available, but not that there is a concern about whether the money is being pilfered. It’s absolutely not the case”, Ewelukwa stated.
He further revealed that NBET had been able to incentivise private investments in the power sector, especially in the generation segment.
He stated that the privatisation of the Trans-Afam and the Afam Fast Power plants about three years ago, which were bought by the Transcorp consortium, earned the federal government a whopping N105.3 billion.
He said the transaction would not have happened without NBET signing PPA with the buyers.
