Tuesday, February 27Inside Business Africa

Criticisms trail NBET’s board structure, movement to finance ministry

Some stakeholders in the nation’s power sector have expressed divergent opinion over the constitution of the new board of the Nigeria Bulk Electricity Trading Company as well as the movement of the agency to the Ministry of Finance, Budget and National Planning.

With some stakeholders insisted that the agency remained transitional and wouldn’t be needed if the country’s power sector was functioning as designed, some experts raised concern over the level of debt in the sector despite the presence of the agency.

While the mission and vision of the agency were to be an efficient and effective catalyst for investment into the Nigeria electricity market by ensuring transparency and guaranteeing payment and create a financially viable electricity market, the market is currently heading toward bankruptcy.

Though created in 2020 as the manager and administrator of the electricity pool in the Nigerian electricity supply industry (NESI), NBET came into existence pursuant to section eight and licensed by section 68 of the Electric Power Sector Reform Act (EPSRA), 2005 to provide services to the power sector.

While it has remained under the Power Ministry, President Muhammadu Buhari recently approved that the agency is moved to the Ministry of Finance, a development, which has created criticism in the sector.

Coming shortly after the Presidency overruled the Minister of Power in the sack of the Managing Director of the agency, Buhari recently approved the constitution of NBET’s new board and named minister of finance, chairman of the board.

Besides, there were indications that some members of the House Committee on Power were unsatisfied over Buhari roles in the agency, insisting that the Managing Director/Chief Executive Officer of Nigeria NBET, Marilyn Amobi could be guilty of alleged gross misconduct and insubordination.

The former Chairman of Nigerian Electricity Regulatory Commission (NERC), Sam Amadi sees nothing wrong or worrisome about appointing the Minister of Finance as Chairman of the NBET Board.

He equally noted that non-appointment of the Minister of Power as a member into that board would not amount to bad decision by the Buhari.

According to him, the president has unlimited discretion to make such appointments and Ministers of Finance have been chair of the body since its establishment.

“NBET is a credit support agency to the power sector. The truth is that it can take any shape. It can be totally in the finance ministry as long as it respects its license conditions since it is a licensed entity that is fine and good.

“Her location does not mean it cannot perform its singular mandate. As long as it’s relocation does not stop or weaken NERC’s regulatory supervision of the agency all is well.

Amadi insisted that how NERC regulates the sector and coordinates regulator policies across the value-chain should a more critical issue than the location or the person chairing the board of NERC.

Suggesting that bureaucratic roles, typical of Nigeria’s democracy could also be a significant factor in the effectiveness and efficiency of the agency, Amadi said the government must find a way to streamline such bottlenecks.

He added: “As long as the bureaucracy of the federal government is streamlined and efficient, the ministers of finance and power will be able to coordinate to guarantee a smooth power sector with NBET playing a supporting role as a credit supplier.”

The Executive Secretary of the Association of Power Generation Companies (APGC), Joy Ogaji sees the exit of NBET from the Ministry of Power to Finance as a policy decision from the President.

To her, the GENCOS would be more interested in getting 100 per cent settlement of their market invoices, whether it is from Ministry of Finance, Central Bank or even Ministry of Power, adding that there was the need for government to keep to the terms of contracts in the sector.

Congratulating the agency and the presidency over the move, Ogaji sees the new board as a welcomed development given that the NBET had over time, operated without a duly constituted board.

“With the constitution of the new NBET board,  we are confident the board will from its wealth of experience bring the needed corporate Governance practices to enable the agency to perform optimally in its given mandate in keeping to the tenents of good corporate practices,” Ogaji stated.

According to her, generation companies remained critical stakeholders in the establishment of NBET to act as a buffer and a creditworthy off-taker to the GENCOS, by providing the needed guarantee as well as bearing the default risks such as liquidity/payment as well as incentivize private investment in power, as necessary to instill confidence on investors.

Asked if NBET has lived up to his expectations in the sector, Ogaji said GenCOs have not received full payment (two-tier pricing for capacity and energy and not variablized payment) for the electricity supplied by them (with currently above a trillion), while the gas suppliers have also not been receiving full payments for gas supplied to the GENCOs.

“The GenCOs are choking from the liquidity crunch, which has resulted in their inability to meet up with their obligations, particularly the thermal GenCos, who are unable to meet with the payment obligations to their gas suppliers who demand up-front payment. This has crystalized in the shutdown of gas supply to some power plants thereby leaving them dormant.

“In addition, the available capacity of the GENCOS have continuously been under-utilized. For instance, for the first quarter of 2020, the stranded capacity of the GENCOS was 4,048.6MW. For 2019, the available capacity was 7,381MW, average utilized was 3,782MW while stranded was 3,599MW. Also the GENCOS are not paid for their ancillary services rendered. These challenges have accounted for the sub-optimal growth, inefficient operation and the current dire situation of the GENCOs, which has a huge negative impact on the entire power sector,” she stated.

A former President of the Nigerian Association for Energy Economists (NAEE), Professor Wumi Iledare noted that NBET was supposed to be transitional.

He added that the agency may not be relevant beyond being insurance for the failure of privatisation.

“The inability of the government, and not this government alone, to reverse its course; privatisation exercise, which brought NBET to existence did not work,” Iledare stated.

Indeed, instead of moving the agency around, Iledare asked the Federal Government to “get rid of it and regroup.

Source: Guardian

Leave a Reply

Your email address will not be published. Required fields are marked *

Notice: ob_end_flush(): failed to send buffer of zlib output compression (0) in /home/insidebu/public_html/wp-includes/functions.php on line 5373