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NERC Frowns Over Contractual Breaches Sets to Remove Exploitation by International Offtakers

………by Ben Ndubuwa……

The Nigeria Electricity Regulatory Commission (NERC) has frown over any form of contractual breaches and is taking fresh steps to eliminate exploitation within the electricity industry especially in the international and bilateral contracts.

The Commission is said to have observed exploitation and practices that is not healthy within the contacts execution.

To address the anomaly, the NERC, has directed the System Operator, to cap power supply to cross-border customers in Benin Republic, Niger, and Togo.

The directive, outlined in a document titled “Interim Order on Transmission System Dispatch Operations, Cross-border Supply, and Related Matters,” will be in effect for six months initially, subject to review.

Nigeria currently supplies electricity to neighbouring countries, including Benin Republic, Niger Republic, and Togo.

The Commission’s order, published on Friday, May 3rd was dated April 29, 2024, and effective from May 1, 2024, was jointly signed by the commission’s Chairman, Sanusi Garba, and Vice Chairman, Musiliu Oseni.

The document stipulates that power delivery to Nigeria’s neighbours must not exceed six per cent of the total grid electricity at any given time.

The electricity sector regulator expressed concern about sub-optimal grid dispatch practices, which have impacted the ability of Distribution Companies to meet their Service Tariff commitments to end-user customers.

“The reliance on limiting Discos’ load off-take while prioritizing international off-takers and Eligible Customers has proven neither efficient nor equitable.”

NERC emphasised that the current international and bilateral contracts with Generation Companies often fall short of industry standards.

It stated that many off-takers contracted bilaterally by Gencos exploit this prioritization, exceeding their contracted levels during peak operations without penalties.

As an interim measure, NERC aims to guide the system operator and TCN in implementing Standard Operating Procedures to enhance transparency and fairness in grid operations.

According to the NERC document, the order also mandates the system operator to place interim caps on capacities supplied to international customers for the next six months, minimizing the impact on domestic supply obligations by Gencos.

The document stated that the system operator must develop and present a pro-rata load-shedding scheme to ensure equitable load allocation to all off-takers (Discos, international customers, and eligible customers) during generation drops or grid imbalances.

“The system operator will log and publish hourly readings, enforcing penalties for violations of grid instructions and contracted nominations. Maximum load allocation to international off-takers in each trading hour shall not exceed six per cent of the total available grid generation.”

It added Bilateral transactions between generators and off-takers require express approval from the Commission.

“The system operator and TCN must install integrated Internet of Things meters at off-take and delivery points to provide real-time visibility of aggregate offtake by grid customers.”

Additionally, TCN announced the commencement of erecting two 132kV transmission towers at the Amukpe substation and restoration work on the Benin-Delta and Delta-Oghara 132kV double circuit transmission lines from May 4 to 17, 2024. During this period, bulk power supply to Benin Disco through specific feeders will be temporarily interrupted.

“The Commission hereby orders as follows: The system operator shall develop and present to the commission for approval within seven days from the issuance of this order a pro-rata load-shedding scheme that ensures equitable adjustment to load allocation to all off-takers — Discos, international customers, and eligible customers — in the event of a drop in generation and other under-frequency related grid imbalances necessitating critical grid management.

“The system operator shall implement a framework to log and publish hourly readings and enforce necessary sanctions for violation of grid instructions and contracted nominations by off-takers in line with the grid code and market.

“The aggregate capacity that can be nominated by a generating plant to service international off-takers shall not be more than 10 per cent of its available generation capacity unless in exceptional circumstances a derogation is granted by the commission.“The system operator shall henceforth cease to recognise any capacity addition in bilateral transactions between a generator and an off-taker without the express approval of the commission,” it added.

It urged “the system operator and TCN to immediately initiate and install integrated Internet of Things (IoT) meters at all off-take and delivery points of eligible customers, bilateral supplies, cross-border trades, and outgoing 33kV feeders of the Discos to provide real-time visibility of aggregate offtake by grid customers.

“The installation of and streaming of data from the IOT meters should be completed within three months from the date of this order.”

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