Electricity commission halts licensing of independent power projects

The Nigerian Electricity Regulatory Commission, NERC, says it has halted further processing of license applications for the establishment of new Independent power projects, IPPs, in Nigeria.

The chairman/CEO of the regulatory agency, Sam Amadi, said the only exception to the decision were those projects captured under the “good cause” provision of the law.

According to the chairman, a resolution by the Commission identified good cause projects to include renewable energy-based power projects, such as solar, wind, biomass or small hydro power plant requiring no fuel supply agreement in which feed-in tariffs have been approved with no capacity charge component.

The others include environment-related projects where a guaranteed fuel source for the generation of power as a solution to waste disposal challenges, including sawmill using saw dust for biomass power, sugar factory using biogas for power generation; grid stability and companies with existing captive power generation permits intending to sell and supply their excess power to the national grid.

Mr. Amadi said since inception in 2006, the commission had issued over 80 new entrant independent power project licenses, with a few currently actively developed.

In spite of these regulations, he said only applications for license that conformed to the requirements of the “NERC Application for License (Generation, Transmission, System Operations, Distribution and Trading) Regulations 2010” in the specified information would be processed.

The potential investors in the country’s power sector, he said, were expected to adhere strictly to the provisions of the NERC application for license as well as the NERC Regulations for the Procurement of Generation Capacity 2014.

In line with Section 96 of the Electric Power Sector Reform (EPRS) Act, 2005, the NERC boss said the Commission had introduced the “Regulations for the Procurement of Generation Capacity 2014” following due consultations with its rule-making process, which began in 2012.

The Chairman said these regulations, which came into effect on February 11, 2014 with a provision for the processes to be used by a buyer in procuring additional electric generation capacity, were made to ensure that licenses issued met the purposes for which they were issued.

Transactions exempted from the regulations include small-scale power plants generating 10 megawatts or less; electricity supply from a self-scheduling generator and any procurement by a buyer under any agreement entered into prior to the coming into effect of the law as well as pending applications for license.

He said the Nigerian Bulk Electricity Trading Company Plc has been directed to commence preparations in collaboration with Systems Operator, Market Operator, Transmission Services Provider and the Gas Aggregation Company of Nigeria for the first electricity power purchase agreement procurement expected on or before June 2015.

The Commission, he said, would continue to process license applications already filed prior to the coming into effect of these regulations, while negotiations between the NBET and new entrant IPPs are ongoing.

The final tariff approval, he said, would be given for construction to commence for about one or two new entrants before the end of the 2014.

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