The Nigerian Electricity Regulatory Commission (NERC) has ordered the Transmission Company of Nigeria (TCN) System Operator to reduce electricity exports to increase the country’s supply. A recent directive from NERC stated that the grid operator’s supply handling has led to difficulties for Nigerians. This is due to prioritising supply under bilateral agreements, such as exports to international clients, over providing enough for domestic customers. The regulator will limit the total grid generation available for international off-takers to 6 percent for six months starting May 1st.
Power companies in Nigeria have partnerships with nearby African nations such as Benin Republic, Niger, and Togo for the Export of electricity, which helps boost their Revenue alongside low tariffs. Nevertheless, companies frequently face challenges in receiving timely payments. In the final quarter of 2023, NERC reported that international customers owed Nigerian power companies $12.02 million in unpaid debts for services rendered. Nigeria is experiencing a rise in outages due to the inadequate capacity to generate electricity.
Local customers are supplied with less than 4,000 megawatts.
Also, power companies are finding it challenging to meet their promises of providing increased daily power or up to 20 hours a day to certain domestic consumers, despite recent tariff hikes, as they are facing limitations in supply. For the past few weeks, the electricity output from the national grid has remained consistently under 3,000 megawatts. Following the directive, grid service data indicated a spike to over 4,700 megawatts. Typically, local customers are supplied with less than 4,000 megawatts regularly.
NERC plays a crucial role in the country’s power sector by creating a conducive environment for Private Sector participation and investment. They conduct regular reviews to ensure that Tariffs are fair for consumers and providers, encouraging efficiency and performance improvements. By issuing licenses and monitoring compliance with regulations, they protect the interests of consumers, promote competition, and ultimately work towards the goal of providing a reliable and sustainable electricity supply for the country’s Economic Growth and development.
Competitive pricing can attract and keep foreign companies.
Implementing fair and transparent pricing structures catering to foreign and local customers is essential for the country’s power companies to achieve a balance. By offering competitive prices that accurately reflect the cost of providing power, companies can attract and retain foreign businesses while ensuring that Nigerian households and businesses have access to reliable energy. This approach promotes a sustainable business environment and economic growth by encouraging Investment in the energy sector. Ultimately, finding this balance benefits all stakeholders by improving access to affordable and reliable power.
Investment can also be attracted to the energy sector. Foreign companies will have confidence in the reliability and affordability of the power supply, leading to increased partnerships and projects that contribute to the sector’s overall growth. This approach can enhance the efficiency and performance of the power grid, resulting in reduced outages and improved service quality for all customers. Ultimately, a well-balanced approach benefits the companies involved and the entire energy ecosystem across the country.
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Lastly, TCN is a government-owned company that is responsible for the transmission of electricity. As the sole transmission power operator in the country, It plays a crucial role in ensuring the efficient and reliable transfer of power from generating stations to distribution companies. They are also responsible for operating, maintaining, and developing the national grid Infrastructure and coordinating power exchanges with neighbouring countries. They are essential in maintaining a stable and secure electricity supply for Nigeria’s power sector.