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Nigeria’s Presidential Task Force on Power (PTFP) has started consultations with IPPs to determine an appropriate level of tariff. This follows the Federal Government’s directive to the Nigerian Electricity Regulatory Commission (NERC) to review electricity subsidy to ensure that the tariffs reflect the cost of power supply.
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The PTFP has met with IPPs, along with 22 companies that have been issued licences to build power plants in Nigeria to discuss a new tariff regime. Abimbola Agboluaje, Chairman of the Sub-Committee on Communications for the PTFP, said that those involved had also discussed the best financial mechanism for providing a credit enhancement system to give IPPs the confidence to sell power to the distribution companies. It was said that Power Purchase Agreements are due to be signed with the IPPs “soon.”
The PTFP has said that there will be a transition period during which a government-backed bulk buyer of power will act as an intermediary between generator and distributor, until the new distribution companies demonstrate their credit worthiness.
Mallam Talba, Administrator of NERC, said that NERC was fast-tracking the review of tariffs in order to help attract more private investment into the power sector.
The system, according to Talba, is being designed by the Ministry of Finance in collaboration with the PTFP. The PTFP wants to accelerate reforms to transform the 11 power distribution companies and six power generating companies, currently under the Power Holding Company of Nigeria (PHCN) into privately owned companies.