Nigeria’s Electricity Supply Goes Premium

Nigeria’s Electricity Supply Goes Premium

The premium power supply initiative, a.k.a “willing seller, willing buyer” has kicked off in some highbrow areas of Lagos. The initiative was introduced into the power sector as a remedy to the constant dispute between DisCos and consumers over pricing. The National Electricity Regulatory Commission (NERC), has for years, disapproved tariff increment requests by DisCos. Stating that the available power supply cannot justify any increment, and incessant complaints by consumers was becoming a burden as weighty as providing adequate power supply.

Since 2013, when the power sector was privatized, NERC has failed to review electricity pricing six times, under the Multi Year Tariff Order (MYTO). A situation that DisCos claim has cost the power sector N1.4 trillion. But NERC believed if the loss doesn’t go the way of DisCos, it would definitely go the way of consumers. It was upon this dilemma that the “willing seller, willing buyer” initiative was birthed, and many places in Lagos are embracing the idea delightfully.

On August 7, BusinessDay reported that Ikoyi, Victoria Island and Banana Island are already in a deal with Eko Distribution Company (EKDC), which has seen their power supply moved to 20 – 22 hours per day, at a cost of around N45 kilowatt per hour.

Two days ago, TheCable reported that Magodo Estate has been enjoying 23 to 24 hours’ power supply from Ikeja Distribution Company (IKDC), using the premium plan.

The EKDC, in an interview explained what the premium power supply is all about and how it works.

“Premium power supply of electricity is the purchase of electricity beyond the existing standards with guaranteed performance levels.

“The initiative differentiates itself from the grid supply as it bypasses the feeder and grid limitations associated with regular power supply.

“it is aimed at providing exclusive services to identified customers who are willing to pay for a stable electricity supply at premium price.” The DisCo said.

What this means is that the DisCos will source alternate power generation that is not connected to the National Grid. In that way, they will be able to meet the premium supply demand without tampering with the supply quota of the regular consumers.

For instance, IKDC is sourcing for 100MW from Egbin Power Plant which is independent from the National Grid. While the DisCo maintains the infrastructure, consumers are expected to sign a Power Purchase Agreement, that will enable the DisCos to provide them with Meters through the Meters Asset Provider (MAPs) service.

Many consumers seem so delighted with the development, saying it’s better to pay N45 per kilowatt than to pay N85-N95 per kWh for generators which besides noise pollution causes environmental hazards.

The strategy will create an avenue for DisCos to make up for losses being incurred as a result of regulatory policies that have for years discouraged upward review of tariff. It will also enable checks and balances that have been missing because of infrastructural deficiencies. NERC has not been able to query DisCos because of these challenges, but that is about to change with the new premium power supply initiative.

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