NBET is an acronym for NIGERIAN BULK ELECTRICITY TRADING PLC.
NBET was incorporated on 29 th July 2010 in line with the “Roadmap to Power Sector Reform” and, in fulfilment of the requirements of the Electric Power Sector Reform Acts (EPSRA) 2005. NBET commenced operations on 23 rd August 2011.
NBET procures power in bulk from Independent Power Producers and successor generation companies for resale to DISCOs, Eligible Customers, or International Customers (EPSRA 2005, Section 25 and 68; NERC License Condition 6).
The Objects of its Memorandum of Association are:
NBET is a Federal Government of Nigeria owned public liability company with two institutional shareholders with the following stakes: The Bureau of Public Enterprise (BPE) has 80% stake and; The Ministry of Finance Incorporated (MOFI) has 20% stake.
To create a financially viable electricity market
“To be an efficient & effective catalyst for investment into the Nigeria electricity market by ensuring transparency & guaranteeing payment”
Professionalism, Integrity, Transparency, Teamwork, and sustainability
According to the Market Rules (Rule 6):
The competitive market for electricity in Nigeria will evolve through the following stages:
The Pre-Transitional Electricity Market is characterised by the following:
This is a market stage that is characterized by:
During TEM, NBET engages in bulk purchase and resale of electricity under the Power Purchase Agreement (PPA) and Vesting Contract (VC) respectively. Thus, invoice settlement will be bilateral i.e. GenCos to NBET on one hand, and NBET to DisCos on the other hand. The PPAs and Vesting Contracts will become effective.
During TEM, the Market Operator (MO) will be the administrator of the Market, administering the Market Rules and Market Procedure. It will also provide Settlement Statement to GenCos, NBET and Discos. The payment of Capacity and Energy will be based on the MO’s Final Settlement. The MO is also in charge of payment of market administration charges to NBET and other market participants.
NBET is able to account for the amount of electricity evacuated onto the grid and dispatched to the bulk electricity customers, with the aid of the System Operator (SO), whose function is to plan, dispatch and operate the transmission system.
NBET is the contractual party to all power purchase agreements (PPA) that are signed with the Generation Companies (GENCOS). The PPA allows NBET to purchase all capacity, energy and ancillary services produced by the Generation Companies during TEM.
NBET is the contractual party to all Vesting Contracts (VC) that are signed with the Distribution Companies (DISCOS). The VC allows NBET to sell all capacity, energy and ancillary service produced by the Generation Companies to the distribution companies during TEM.
The Power Purchase Agreement is a medium to long term contract that goversns the production, sale and purchase of electricity capacity and energy between generation companies (GENCOS) and NBET, it is also referred to as an “offtake” agreement. In the PPA, the GENCO generates power for sale (the Seller/Producer), while NBET purchases the power (the Buyer/Offtaker).
The Vesting Contract is a contract used to transfer the rights, obligations, title and ownership of the electricity contracted under the PPA from NBET to the DISCO. In the PPA , NBET is the Buyer and the GENCO or IPP is the Seller; whilst in the VC, NBET is the Seller and the DISCO is the Buyer.
YES. The Nigerian Power Sector is replete with investment opportunities across the value chain, and there are relevant agencies within the sector to support new and existing investors. NBET has advanced to the phase of catalysing investment for new generation capacity through competitive procurement.
NBET will procure new generation capacities for the market through the execution of a Power Purchase Agreement (PPA) with any interested Independent Power Producer (IPP) through a competitive procurement process as detailed below:
A new entrant can sign a PPA with NBET when they must have met all four mandatory requirements and concluded negotiations on the terms in the PPA. NBET can purchase a minimum of 30MW.
The PPA term is usually 20 Years.
NBET began trading with commencement of the Transactional Electricity Market (TEM). NBET acts as a link between the Generation Companies (GenCos) and Distribution Companies (DisCos) through PPA and Vesting Contract. To this extent, NBET ensures that GenCos are paid through the prime source of revenue which is the payment receipts from the DisCos for energy sales through Vesting Contracts. In addition, there are other funding sources such as FGN Budgetary Appropriation, Payment Assurance Facility, and the Power Sector Recovery Operations (PSRO) to ensure sufficient settlement of GENCOS invoices and strengthen of the electricity market.
New entrants into the Nigerian Electricity Supply Industry are advised to use the Multi Year Tariff Order (MYTO) model to calculate tariff for megawatts of power. This model is available for download on Nigerian Electricity Regulatory Commission (NERC), the regulator’s website – www.nercng.org In a situation where the new entrants’ assumptions or costs lead to a tariff higher than MYTO, NBET and the new entrant can then discuss the assumptions contained in the new entrants financial model on an open book basis and agree a reasonable and cost-reflective tariff with the new entrant. After the tariff has been agreed, both parties will then have to seek a waiver from NERC to sign the PPA containing the higher tariff.
Investors/New Entrants should commence the enquiry process on generation license from the Legal, Licensing & Enforcement department of the Nigerian Electricity Regulatory Commission (NERC) prior to proceeding further on the project.
It is a series of carefully thought out policy actions, operational and financial interventions to be implemented by the Federal Government of Nigeria to attain financial viability of the power sector, and reset the Nigerian Electricity Supply Industry (“NESI”). Please visit: www.psrp.org.ng.
NBET is constantly seeking professionals who are driven by excellence to join its talented team to deliver positive solutions to the Nigerian Power sector. Available vacancies are advertised through its website and print media.
NBET is constantly seeking professionals to join its talented team who are driven by excellence to deliver positive solutions to the Nigerian Power sector.