Nigeria risks blackout as TCN moves to disconnect defaulting Discos, Gencos. on CrosskayNews

The Transmission Company of Nigeria

(TCN) announced that certain distribution companies are at risk of being disconnected for failing to adhere to market rules, which could result in Nigeria experiencing a blackout in the near future. This statement comes shortly after the generation companies threatened to stop operations. The government-owned TCN issued a statement in Abuja, stating that market rules, which regulate the Nigeria Electricity Supply Industry (NESI), are not being followed by industry players.

The Nigerian Electricity Market (NEM), which is the Transmission Company of Nigeria's (TCN) branch responsible for market operations, recently issued an order (TCN/ISO/MO/2023/001) accusing the Distribution Companies (DisCos) of violating the Conditions of Market Rules and Market Participation Agreements. These violations primarily concern the non-payment of fees for ancillary electricity services.

The distribution companies in Nigeria became privatized in 2013 and now serve as the primary revenue generators for the country's electricity industry. The funds generated by these firms are used to support the operations of several other entities, including the Nigerian Electricity Regulatory Commission, TCN, and The Nigerian Bulk Electricity Trading (NBET) Plc. These organizations are responsible for settling invoices from GenCos, gas suppliers, and transporters.

In 2019, TCN disconnected Port Harcourt, Kano, and other DisCos due to their failure to comply with market regulations, which was a situation similar to what occurred in the past.

Last month, the market operator released a list of defaulting Market Participants (MPs) which included nine DisCos, three GenCos, and Ajaokuta Steel Company, a special electricity end-user/customer, in the order the defaults occurred.

According to Edmund Eje, the Head of Market Operation at TCN, adherence to the rules governing the market is crucial for the sector's viability and sustainability. He emphasized that these rules are sacred and must be followed by all players in the sector, whether new or existing. The power sector comprises generation, transmission, and distribution companies.Adherence to the rules of governance and regulation in the power sector is essential for creating a harmonious environment for growth, efficiency, profitability, and long-term sustainability. All players must interact effectively and comply with these rules.

The lack of market discipline within the Nigerian Electricity Supply Industry (NESI) has had a disastrous impact on the scalability and growth of the market. Although all participants sign the Market Participation Agreement, compliance is often challenging for many. If all players follow the rules of the game, there would be no need for sanctions.

According to Eje, TCN is set to impose sanctions on non-compliant market participants after issuing them with notices and allowing them time to adhere to the regulations.

Eje further stated that one of the consequences of the sanctions would be the partial or complete disconnection of defaulters from their point of connection to the grid.