NIGERIAN ELECTRICITY REGULATORY COMMISSION “Ongoing Power Sector Reform & Inherent Investment Opportunities : Powering Options for Nigerian SMEs By Dr.

Slides:



Advertisements
Similar presentations
The role of competition authorities in utilities regulation. Co-operation with sector regulators. The role of Competition Council of Latvia Valdis Latkovskis.
Advertisements

GAMBIA COMPETITION COMMISSION GAMBIA COMPETITION COMMISSION Levelling the Field for Development BY : EXECUTIVE SECRETARY 5 TH JUNE 2013.
Creating Competitive Advantage
REGULATORY AND INVESTMENT CHALLENGES IN HYBRID POWER MARKETS IN DEVELOPING COUNTRIES REGULATORY AND INVESTMENT CHALLENGES IN HYBRID POWER MARKETS IN DEVELOPING.
COMPETITION POLICY AND ECONOMIC DEVELOPMENT PRESENTATION AT CUTS-ARC CAPACITY BUILDING WORKSHOP, LUSAKA 7 TH MARCH, 2011 BY SAJEEV NAIR, COMPETITION POLICY.
Albanian power market Sokol RAMADANI Chairman ERE- Albania 1 FEBRUARY 2012 Electricity market design and regulatory issues in Albania and South East Europe.
TARIFF REGULATION IN THE NIGERIAN ELECTRICITY SUPPLY INDUSTRY
Regulatory framework in the Energy Sector Chairman Ph.D. Tserenpurev Tudev Energy Regulatory Commission of Mongolia Energy Mongolia-2012 Ulaanbaatar Mongolia.
Hydropower Development: Experience of Nepal
Bringing about beneficial change... POLICY DIALOGUE ON CORPORATE GOVERNANCE IN CHINA Presentation by Patricia Leahy, Director, UK National Audit Office.
BY S. U. YAMUSA II AND A. H. ANSARI
Organization of the electricity supply industry © 2012 D. Kirschen & University of Washington 0.
GHANA’S AGENDA FOR SHARED GROWTH AND DEVELOPMENT,
NIGERIAN ELECTRICITY REGULATORY COMMISSION Uniform System of Accounts (USOA) for the Nigerian Electricity Supply Industry (NESI) Presented by: Abba Ibrahim.
E.ON on the Romanian Energy Market ZF Power Summit Bucharest, February 27, 2013 Frank Hajdinjak CEO E.ON România.
An Overview of Our Regulatory Proposal
Competition and Regulation Interface in Developing Countries: Realities from the Power Sector By Ama Asantewah Ahene* and Emmanuel A. Codjoe** *Institute.
ENHANCING THE POLICY FRAMEWORK FOR SUSTAINABLE ENERGY INVESTMENT Guidance from the OECD to developing and emerging economies Karim Dahou, Investment Division,
ProFina - Project and Private Finance Feb 2002 Whither Private Sector Participation? Private Investment in the Utility Industries – Energy, Transport,
Electricity Reforms in Bangladesh
POWER SECTOR POLICY OVERVIEW ASSOCIATION FOR POWER UTILITIES OF AFRICA (APUA) SCIENTIFIC COMMITTEE CONFERENCE Presentation by Mr. M. Mulasikwanda Department.
Electricity Supply in the New Century Dr Malcolm Kennedy Chairman PB Power Ltd including the power businesses of Merz and McLellan and Kennedy & Donkin.
Vietnam Budget Reform over and Intentions over Content (3 parts): 1.Fiscal – budget reforms initiatives making important contribution.
Nigerian Electricity Regulatory Commission IMPLEMENTING AN EFFECTIVE COST REFLECTIVE TARIFF Dr. Sam Amadi Chairman, Nigerian Electricity Regulatory Commission.
RENEWABLE ENERY & BIOMASS COGENERATION TRAINING – KENYA BY LEWIS B. MHANGO.
Impact of Liberalization of the Electricity Market on Energy Efficiency, Quality of Supply and Environmental Performance Eric BONNEVILLE ECI Webconference.
Prof F.D. Yamba I NTERNATIONAL S EMINAR REFIT AND CHALLENGES IN ZAMBIA 30 TH – 1 ST M ARCH, 2015.
Russian power sector reform Presentation to AmCham Russia members by CEO of Unified Energy Systems of Russia, Anatoly B. Chubais March 20, 2001Moscow.
Overview of NER and its Future Business Direction Presentation to Standing Committee on Minerals and Energy Parliament 09 May 2001.
The strategy for improved electricity distribution maintenance 9 June 2008.
Directorate General for Energy and Transport European Commission Directorate General for Energy and Transport Regulation of electricity markets in the.
Natural Gas – Some Regulatory Issues Oil & Gas Industry Practice.
Critical Issues Electricity Distribution Industry Restructuring Electricity Distribution Interests of Distributors Power Shortages and the Economy Importance.
Introducing Competition in the ESI Naresh Singh Head: Compliance.
2008 Electricity Distribution Maintenance Summit Stream 3A: Funding, Investment and Financial issues 10 June 2008 Theo van Vuuren Divisional Executive.
Major Energy Challenges Availability and accessibility Sufficiency (lifeline supplies) Reliability and Cost Dimension.
Methodology for preparing national cotton strategies in Africa Alexander Sarris Director, Commodities and Trade Division Food and Agriculture Organization.
NEGOTIATIONS ON SERVICES NEGOTIATIONS ON SERVICES Commercial Diplomacy Programme &TrainForTrade.
© OECD/IEA 2011 Energy Efficiency in Central Asia: Challenges and Opportunities VII KAZENERGY EURASIAN FORUM World in Transition Shaping Sustainable Energy.
DEVELOPMENT COOPERATION FRAMEWORK Presentation by Ministry of Finance 10 December 2013.
World Bank Framework for Energy Trade in South East Europe David Kennedy World Bank.
Outline The key findings What the SGA Summit did Smart City Amsterdam Some more detail on the disrupters – Ecosystem of the Grid – Distributed Generation.
1 Belarus CEM Discussions Energy Sector Stable sector structure and governance over the past decade together with recent macro economic performance of.
1 Vienna Economic Forum –VEF- ERE AND THE REGULATORY FRAMEWORK FOR THE PRIVATISATION OF DSO Bujar Nepravishta Chairman of ERE Tirana-8 th and 9 th June.
RAO UES Reform: The Final Stage. 2  RAO “UES of Russia” today  Reform: company transformation and market development  Conclusions Table of Contents.
Electricity Sector April Electricity sector in perspective Electrification of households is one of Government’s priority programmes The country.
Role Of ERC in the WESM To enforce the rules and regulations governing the operations of the WESM and monitors the activities of the Market Operator and.
Supply-Side Economics
1 SYMPOSIUM: U G A N D A A F T E R I D I A M I N A N D M I L T O N O B O T E Hamburg, Germany 29 th September 2008 INVESTMENT OPPORTUNITIES IN POWER GENERATION.
EgyptEra 1 Market Reform By: H. Waheed. 2 Objectives Of Regulatory Agency  Regulates and supervises all electricity generation, transmission, and distribution.
Kazakhstan Electric Association KEA Established in 1998 Unites 21 participants and 12 observers Among participants 9 distribution companies 3 vertically.
Electricity Power Market: Competitive and Non-competitive Markets Ito Diejomaoh.
ITCILO/ACTRAV COURSE A Capacity Building for Members of Youth Committees on the Youth Employment Crisis in Africa 26 to 30 August 2013 Macro Economic.
The Company Bureau of Public Enterprises Transmission Company of Nigeria The Role of The Management Contractor For TCN The Company Brian Wales and Geoff.
State Regulation in the Natural Monopoly Sphere Agency of the Republic of Kazakhstan on Regulation of Natural Monopolies ALMATY – 2006.
Energy Regulatory Authority (ERA) of Mongolia Mr.Tumentsogt Tsevegmid, MSc, MPA Regulator, Energy Regulatory Authority University Street 2A, Ulaanbaatar.
Japanese Electricity Market M. Hossein Javidi Iran Electricity Market Regulatory Organization & Administrative Department for Electricity Market Regulatory.
1 Financial Sector Development in Myanmar Presented by Mr. Nyo Aye Mr. Win Hteik Assistant Director Board Secretary Ministry of Finance Central Bank of.
CARILEC. An Association of Electric Utilities CARILEC An Association of Electric Utilities The Caribbean Electric Utility Service Corporation (CARILEC)
Presentation to the Portfolio Committee on Energy
Chairman of the Board and CEO,
POWER SECTOR REFORM: OPPORTUNITIES FOR THE NIGERIAN ENGINEERS
REFLECTED IN JAMAICA’S ENERGY POLICY
Rajib Das Dy GM, Planning November 5, 2017 Transition of India’s
ERERA AND ECOWAS ELECTRICITY MARKET DEVELOPMENT AND REGULATION
“Energy Sector Governance and Cost Reflective Pricing in West Africa”
GREEN MINIGRID REGULATORY REFORM: TRENDS AND APPROACHES *
WATER REGULATORY AUTHORITY
Developing the power sector in Federal Nepal Main lessons from international experience Kathmandu, November 06, 2018.
Albanian power market ERE- Albania Sokol RAMADANI Chairman E R E
Presentation transcript:

NIGERIAN ELECTRICITY REGULATORY COMMISSION “Ongoing Power Sector Reform & Inherent Investment Opportunities : Powering Options for Nigerian SMEs By Dr. Sam Amadi Chairman / CEO Presentation at the 5 th Nigerian Development & Finance Forum May 29 th – 30th 2014.

Basic Facts about Electricity Supply in Nigeria Grid electricity began with a 25mw coal-fired plant in Lagos around 1896 Later Electricity Company of Nigeria that later became Nigerian Electric Power Authority In the late 1980s electricity network collapsed in Nigeria with acute shortage Reform began in 2000 with the National Electric Power Policy (NEPP). The regular grid generation was less than 2000wm daily with a demand of over 12000mw then Later reform was institutionalized in the Electric Power Sector Reform Act 2

The need for reform Collapsed electricity network Limited access to infrastructure, low connection rates Chronic shortage of generation capacity No investment for expansion and maintenance High technical losses and vandalism Insufficient transmission and distribution facilities Lack of financial viability Inefficient industry and market structure Unclear delineation of roles and responsibilities 3 Problems in the power sector before the reforms

Framework of the Reform Vertical and horizontal unbundling of NEPA [PHCN] – Vertical unbundling – functional separation generation, transmission and distribution/marketing – Horizontal unbundling – PHCN successor companies Creation of transition reform entities New industry structure- System and market operators established Corporatization towards privatisation of successor companies Development of industry contracts (Vesting contracts, TUoS, Ancillary services contracts etc Privatization Transition Electricity Market (TEM)- step towards a fully competitive market Medium Term Market Fully competitive electricity market 4

Pathways to Efficient ESI Liberalization of generation by licensing many independent power producers (IPPs) Ring-fencing of system and market operations from Transmission Service Provider to allow for non- discriminatory scheduling and despatch of power Cost reflective tariff indexed to inflators and review according to a well-established legal methodology (the Multiyear Tariff Order) Later unbundling of retail from distribution to allow for competitive and choice in the retail side of electricity business 5

Why PHCN Was Unbundled Across the world, countries are unbundling their ESI. Only the network elements of electricity transmission & distribution are natural monopolies. Both electricity generation and sales/marketing of electricity are potentially competitive activities. Technological developments -Combined Cycle Gas Powered Generators: has increased the gains from introducing competition into generation; -Modern Computing: has brought improvements in transmission & system dispatch, which allows for the introduction of short-term and contract markets in bulk power: Such markets encourage the introduction of private management methods and private investment as well as fostering the privatization of existing assets. The intention is that the reforms would introduce these now widely applied developments to Nigeria 6

Objectives of the reform Create an efficient and competitive electricity market Ensure transparent and responsible management of energy resources Reduce Public Sector Borrowing Requirement (PSBR) – Eliminate government’s involvement in utility management – Focus public finance on other development priorities and creating enabling environment Promote Private Sector Participation – Management and technical operations – Encourage private investment in generation to address inadequate supply – Ensure level playing field for all investors 7

Key Features of the Contracting Framework Vesting contracts – Intermediate step to move from integrated utility to fully competitive market – Designed to ensure an orderly transition Bilateral contracts -Only contractual tool used in buying and selling electricity 8 during transition After market matures

9 Trading Arrangements in Transition Discos NBET JVs & New IPPs Existing IPPs Host Gencos NIPP New IPP Vesting Contracts All trading are through contracts NBET will assume existing IPPs and eventually sign new PPAs under NERC supervision. NBET and other Gencos will have vesting contracts with respective Discos. (These contracts will become Special Contracts on privatisation) PPAs

Trading Structure of NESI in Transition SHELL (Afam) AGIPAES NEBTEGBINSAPELESHIROROKAINJIJEBBADELTA New FGN Host Plants KadunaKanoYolaAbujaEnuguIbadanBeninP/HJosIkejaEko PPAs GenCos Vesting Contracts IPPs 1 Bilateral Contracts IPPs 2

Reform Institutions and Roles Market operations - To oversee the market and commercial arrangements System operations - Overseeing dispatch and grid control Nigeria Electricity Liability Management Company - To manage legacy liabilities and stranded assets Nigeria Electricity Bulk Trading Co - Created as a Special Trader with bulk purchase and resale licence - Manage existing PPAs and new procurement of power in the transition NERC- commercial and technical regulator for the entire industry 11

Key reform activities Grid Code developed and issued. Market Rules developed and issued Distribution and Metering Codes issued. Tariff methodology and connections agreements developed TEM rules drawn, stakeholders comments received TCN management contractor engaged -Aims to be a world class transmission company 12

Reform and SMEs The reform aims at providing adequate and reliable electricity to business and homes The Electric Sector Reform Act 2005 mandates the regulator to protect the interests of consumers (including small and medium enterprises) through regulated tariff and quality of service regulation The Act also mandates the commission to create an efficient electricity market 13

Powering SMEs is strategic to the reform because..... Is the engine of job creation Is the nursery bed for technological and managerial innovation that drives qualitative economic growth It is easy to start, nimble and innovative and adapted to customer feedback It improves household income and helps most with reducing poverty and inequality 14

Challenges with Powering SMEs Inadequate generation means inadequate electricity (gas constraints) Weak and collapsed networks means unreliable supply of limited electricity Poor connectivity means that a significant number of SMEs are not connected to the grid Low metering means that many of the SMEs are overestimated Inefficient productions means higher tariff 15

Solutions to the Challenges Embedded generation to increase generation by avoiding the constraints of weak transmission network Independent distribution network (mini-grid) to allow for better rural electrification and connection to the grid; also Light-up Nigeria project to Local content law to create a market for Nigerian companies Power Consumer Assistance Fund (PCAF) to make affordable tariff for C1 customers to reduce their capex and opex and make them globally competitive to 16

Business Opportunities for SMEs The local content regulation mandates licensees of NESI to employ Nigerian companies to undertake professional services like accounting, legal services and others. Only when there is no qualitative Nigerian professional service can there be exemption The law also requires nigerianization of technology and equipment There opportunity for SMEs for AMI infrastructure, theft detecting software, virtual gas pipelines solutions, anti-vandalism technology, smart grip equipment, billing and revenue management outsourcing, etc 17

Short to long term expectations To ensure a system of generation, transmission, distribution and marketing that is efficient, safe, affordable and cost-effective throughout the country; To ensure that the power sector attracts private investment both from Nigeria and from Overseas; To develop a transparent and effective regulatory framework for the power sector; To develop and enhance indigenous capacity in electric power sector technology; To participate effectively in international power sector activities in order to promote electric power development in Nigeria, meet the country’s international obligations and derive maximum benefit from international cooperation in these areas; 18

Short to long term expectations To ensure that the government divests its interest in the state-owned entities and entrenches the key principles of restructuring and privatization in the electric power sector. This has now been largely achieved with the Nov. 1 st 2013 handover of PHCN assets. To promote competition to meet growing demand through the full liberalization of the electricity market; To review and update electricity laws in conformity with the need to introduce private sector operation and competition into the sector. 19

Short to long term expectations To provide a new regulatory environment that is sufficiently flexible to take into account new technological developments and the international trends in the power sector; To ensure that electricity supply is made more reliable, economically efficient and equitable so as to effectively support the socio-economic development of the country; To provide universal access to electricity, although not necessarily through the grid; To encourage domestic production of electrical equipment in Nigeria, and the development of related software and services; 20

Short to long term expectations To establish and meet aggressive targets for the rural electrification programme; To protect the integrity, and ensure the security, of the state and its citizens; To encourage Nigerian electric power sector operating companies to become global leaders in the industry; To ensure minimum adverse environmental impact; To create the enabling environment, including the provision of incentives, that will attract investors and resources to achieve the objectives earlier stated; 21

Short to long term expectations To ensure a leadership role for Nigeria in the development of the proposed West African Power Pool. To minimize government guarantees for privately funded investment; and To ensure that subsidies are efficiently targeted. 22

EXPECTATIONS – For the Economy  When demand is fully met, GDP growth in 10 years could be in two digits annually.  Creation of more businesses and more jobs.  FGN subsidies to PHCN will be re-channeled to other sectors like agriculture, health etc.  Reduced risks to taxpayers.  Reduced environmental impact.  Stronger Naira against others currencies.  Saving of estimated $1bn losses annually.  Increased foreign exchange earning as export of finished goods is enhanced.  Re-direct spending to other critical social services. 23

EXPECTATIONS – For the Economy Increased competition Lower prices Increased operational efficiency in generation and distribution Improved customer service/rural electrification Improved service standards Wider service provider choice Increased consumer protection via Nigerian Electricity Regulatory Commission (NERC) As the industry tariffs is stabilized over a periods, there would be tariff reduction in real terms. This happened in several countries Better human development index- health and education 24

Where we are Experts suggest the following five major steps in implementing the reform of the power sector, in different orders of preference: -Getting the investment framework right. -Deciding on the goals of restructuring and the ideal industry structure. -Preparing the players to participate in a competitive market. -Privatising existing and new assets (this has taken place on Nov.1 st 2013) -Ensuring that the competitive market is implemented properly. Most of the tasks outlined above (Item Nos. 1 – 4) have been completed while Item No. 5 is in advanced stages, as we approach the TEM soon. 25

Where We Are – Cont. S/NDescriptionStatus 1Create an enabling legal and regulatory environment to support competitive markets in electricity. Done 2Unbundle power sector into separate generation, transmission, distribution and possibly retailing sectors to achieve the maximum benefits for customers. Done 3Privatisation should be a transparent process involving the sale of power distribution utilities as well as generation plants, and covering existing assets as well as new projects. Done 4Open access to transmission and distribution wires, and the ability to trade power between buyers and sellers in an open market, are critical to achieving a competitive framework. Done

Where We Are – Cont. SNDescriptionStatus 5 Operate the generation and retailing markets competitively, with a large number of generators selling into a wholesale electricity market at prices which balance demand and supply throughout the day. In Progress 6 Operate the transmission network under a management contract, resulting from a competitive bidding process. Done & Active 7 The independent regulator should oversee prices and incentives for transmission and distribution operations. Done 8 Restructuring should proceed at a pace consistent with the development of a competitive and unbundled system. Done

Where We Are – Cont. SNDescriptionStatus 5 Operate the generation and retailing markets competitively, with a large number of generators selling into a wholesale electricity market at prices which balance demand and supply throughout the day. In Progress 6 Operate the transmission network under a management contract, resulting from a competitive bidding process. In progress 7 The independent regulator should oversee prices and incentives for transmission and distribution operations. Done 8 Restructuring should proceed at a pace consistent with the development of a competitive and unbundled system. In progress

Contact us at: Adamawa Plaza, Plot 1099 First Avenue, Off Shehu Shagari Way, Central Business District, Abuja THANK YOU Website/info: Electricity on Demand