Nigeria Cuts Electricity Sales To Customers Overseas
Nigeria’s electricity regulator has ordered the grid operator to cut back supplies to customers overseas to boost domestic supply.
In a directive issued last Friday, the Nigerian Electricity Regulatory Commission (NERC) said the grid operator’s current approach in managing supply has caused significant hardship for Nigerians because supply under bilateral contracts including export to international customers takes priority over supply to domestic customers.
The regulator said it was placing a cap of 6% on the total available grid generation to international off-takers for the next six months, effective from 1 May.
Nigerian power firms have contracts with neighbouring African countries to deliver energy, which gives them foreign currency to support revenue from sub-economic tariffs.
However, these companies have not always paid their bills on time.
Power cuts are common in Nigeria due to a shortage of electricity but they have become worse recently.
Power companies recently raised tariffs for some domestic customers who are supposed to get more power daily, or 20 hours a day, but the power companies are unable to meet the supply.
As well as having contracts with countries such as Niger, Togo and Benin, Nigerian power firms have bilateral contracts with big users at home including industries and government departments that get priority supply over regular customers.
Analysts said the cap on overseas sales could create uncertainty in the sector.
“Operationally, it will require power generation companies to adjust production and distribution, and potentially modify contracts on short notice”, Mikolaj Judson, an analyst at global risk consultancy Control Risks, said.
He also said it will likely increase financial challenges by reducing revenue from overseas customers and will require power distribution firms, many of which already owe sizeable debts to power generation companies, to step up paying back their debts.
Electricity supply from the national grid had hovered below 3,000 megawatts for several weeks but has risen above 4,700 megawatts since Saturday after the directive, grid service data showed.
Usually, local customers get less than 4000MW on normal days.
Source: Asaase radio
