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Tuesday, February 7, 2023

Leveraging energy trading for improved power supply

In the modern era, we are nothing without power. We use electricity for lighting, heating, cooling, and refrigeration; for medical purposes and for operating appliances, public transportation systems, and much more.

Power station
Power station

Power is an essential part of modern life and it helps us in many different ways, according to U.S. Energy Information Administration.

To ensure that Nigerians get adequate power supply, the Nigerian Bulk Electricity Trading (NBET) says it plans to deploy an automated energy trading platform/exchange to promote bilateral trading.

The Nigerian Bulk Electricity Trading Plc. is the manager and administrator of the electricity pool in the Nigerian electricity supply industry.

It was incorporated on July 29, 2010 and is 100 per cent owned by the Federal Government of Nigeria.

NBET’s main responsibilities is to manage existing power purchase agreements and new procurement of power in the electricity industry transition process

The agency said that the trading will be between Independent Power Plants (IPPS) and commercial/industrial customers in 2023.

The Managing Director of NBET, Mr Nnaemeka Ewelukwa, recently said in a document entitled “Actualising Enhanced Electricity Supply and Commercial/Industrial Decarbonisation in Nigeria” that the platform would promote bilateral trading in the power industry.

Ewelukwa said that the platform would have multiple energy brokers playing key roles in linking energy suppliers and customers registered.

According to him, the IPPS wishing to sell power can register on the platform to access a comprehensive database of commercial and industrial customers nationwide, and their energy needs.

He listed those that would be involved in the platform to include: Commercial and industrial customers and industrial clusters; generation plants; transmission and distribution network.

Others, he said, are gas pipeline network; energy locations, including solar irradiation, wind and mini-hydro potential.

“The platform will efficiently link sufficient numbers of buyers and sellers thus facilitating price discovery.

“With price discovery, energy buyers and sellers have the assurance that they are purchasing these commodities at fair prices in a reliable marketplace.

“It will also ultimately enhance overall visibility of tariffs, capacity availability, costs and prices along the energy value chain, which will aid buyers and sellers in undertaking transactions,” he said.

Ewelukwa said the platform would facilitate private investments in the transmission and distribution network in order to fully bridge the infrastructure gap between electricity demand and supply.

According to him, it will also reduce the technical, commercial and collection losses in the system.

He said that the platform would also promote business partnerships involving customers,Independent Power Plants (IPPs), Transmission Company of Nigeria (TCN ) and the Distribution Companies.

Ewelukwa also said that a comprehensive interactive map would be developed by NBET, which will show the geo-locations of the facilities within Nigeria and the ECOWAS sub region.

He said that the interactive map would facilitate transaction structuring by willing buyers and sellers, network investment coordination.

It would also guide investment decision-making, and facilitate greater policy planning and efficient resource planning.

Ewelukwa said that the Securities and Exchange Commission, Nigerian Electricity Regulatory Commission (NERC), as well as the Nigerian Midstream and Downstream Petroleum Regulatory Authority were being engaged by NBET to facilitate the process.

“The Federal Ministries of Power; Finance, Budget and National Planning; Industry, Trade and Investment; as well as the media and civil society organisations (CSOs) are also being engaged

“Similarly, NBET is interfacing the Manufacturers Association of Nigeria (MAN), Nigeria Employers Consultative Association Chambers of Commerce.

“Industry, Mines, and Agriculture, Nigeria Association of Small Scale Industrialists; and Nigeria Association of Small and Medium Enterprises,” he said.

Mr Abdullahi Sambo, Head Policy, Projects. Research and Statistics, NBET, said the agency was conscious of that the success of initiatives taking place within the power sector requires synergy across the board.

Sambo said that the Board of Directors of NBET tasked the agency to strategically position itself to be a market enabler.

“So that all the initiatives taking place are not necessarily funded by the Federal Government or multilateral or bilateral funding,” he said.

According to him, NBET was working on developing a market organically to produce a comprehensive data hub that will provide information on electricity producers and customers.

“This is a data driven initiative that will match-make the producers and the consumers leveraging existing infrastructure development,” he said.

A legal expert, Mr Peter Onieomola, said the power projects use PPA to determine the price to be paid for electricity generated.

Onieomola, a Senior Lecturer, Faculty of Law, University of Ibadan, said that PPA was also used to determine the amount of electricity to be generated, specifying the terms and obligations of the parties within stipulated periods in the project cycle.

Onieomola said that, in most cases, the seller bears the responsibility for the costs of all transmission upgrades necessary to deliver the electricity from the generating plant to the delivery point

“However, depending on the parties’ negotiation, the seller may pass some or all of these costs on to the purchaser,” he said.

Onieomola said that in a private sector-driven power sector, the role of PPA cannot be overemphasised.

Experts are of the opinion that if enabling environment is created there will improved power supply in the country.

This atmosphere is, however, largely dependent on the ability of relevant stakeholder, including those involved in energy trading, to cooperate in tackling the multi-faceted challenges facing the sector.

By Constance Athekame, News Agency of Nigeria (NAN)

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