How tasking is it for you to play your role in the market?
It is a tasking mandate but the good thing is that this has been thought through by the government. The government has continued to implement the road map to power sector reform and we have a very strong board that is providing guidance, it is a big task but we feel we are very well prepared for it.
Going into TEM, what challenges have you identified so far?
One of the challenges is that nobody has operated in the market according to the contract but in the last two months, our contract management team is working with the regulator and other stakeholders in the market, including the market operator, under what we call the ‘shadow trading’ to see how things will pan out now that we have entered into the transitional electricity market.
What are those challenges that you are trying to guard against?
There are issues regarding how the tariff is being implemented around the country by each of the distribution companies and some of the distribution companies are still having challenges to meter customers and extend service to people. We also face vandalism of gas pipeline and when that happens, generation companies do not generate enough power to light up homes and you find out that consumers feel very aggrieved by the fact that they have to pay some charges and the power is not coming. Vandals deprive Nigerians of adequate power.
USAID and other foreign agencies are interested in your activities. Are you a model bulk trader for the African power sector?
This is where people have to give this government a lot of credit for the reform. The feedback we have gotten from Power Africa is that Nigeria is actually a model. Not just the bulk trader but even our regulator, the policy, reform by the Bureau of Public Enterprise (BPE) and unbundling of the PHCN are of interest to others. The bulk trader initiative is created just three years back. Within that time, we have made a large impact. For instance, our recently launched Power Purchase Agreement (PPA) handbook is centred around the work and experience of the bulk trader in three years of negotiating PPA and we have continued to see a lot of regional governments like Ghana, Cote D’ivoire, Guinea, Gambia and others watching Nigeria to see how we have been able to do things.
What level of response have you received from distribution companies with regards to posting Letters of Credit to you?
Currently, we have about 8 of the distribution companies that have posted their LCs which shows that they are comfortable and confident that this market can take off the way it was designed to be.
How have the market fared with 100% revenue remittance within the last two months of TEM?
That is why we have these bank guarantees from the distribution companies saying to us that they committed to making their payments and if they do not, we fall back on these guarantees. We expect that market should go the way it should go.
Recently, the AfDB announced its willingness to provide a PRG for coal-to-power, how are you taking this development?
It is welcome news and you know that we are also working with the World Bank for Partial Risk Guarantee (PRG) to support the projects that we undertake. Unfortunately, the World Bank is not quite committed to giving support to coal because they deem it to be dirty fuel and not very good for the environment. However, the AfDB which is an African institution, understands that Africa needs power from every source that it can get and it’s supporting coal. We welcome that and they offered to support some projects that we are working on like the Zuma energy and other coal projects that we see around the country. It is very welcome news and we appreciate that.
What is this total financial pocket for the AfDB PRG for coal-to-power?
I know that it is a number that is about $200 million.
What do you make of the recent removal of collection losses from the MYTO by the NERC?
The tariff that we work with is the wholesale tariff which is between us and the generation companies. To some extent, I think the collection losses were in excess and the way the commission is addressing it is based on consultation with the distribution companies.
