MR Chukwudi Ojukwu, utility regulation specialist, has given an insight into why the federal government is floating two new firms in the nation’s electricity sector of the economy. Government is setting up the Nigerian Electricity Liability Management Company (Nelmco) and the Nigerian Bulk Electricity Trading (Nibet) Plc.
The two firms have already been incorporated by the duly incorporated with the Corporate Affairs Commission (CAC) by the Bureau of Public Enterprises (BPE). BPE and the ministry of finance Incorporated (Mofi) are the guarantors and shareholders of the two companies.
Ojukwu explained that the two firms are critical Special Purpose Vehicles (SPVs) in the reform and privatization process and would ensure stability in the sector. He further explained that the two firms were put in place in order to ensure an orderly transition from an integrated monopoly structure represented by PHCN to a market industry structure created by the unbundling of PHCN.
Nelmco, when operational, would assume and manage the pension liabilities of the Power Holding Company of Nigeria (PHCN) as well as assume and manage the payment of unpaid debts of legacy Independent Power Projects (IPPs). The company would also assume and manage the non-core assets of PHCN which could be sold for the purpose of financing the repayment of the residual liabilities of PHCN.
Nibet Plc, on the other hand, would undertake the business of trading in the wholesale electricity market as a bulk purchaser and bulk seller of electricity and ancillary services. The company will also takeover the contract management and obligations of federal government under existing Power Purchase Agreements (PPAs).
The bulk trader would also act as a middleman for the existing power distribution companies until they are credit worthy to enter into bilateral contracts with IPPs and also provide comfort to investors as payment support mechanisms will be anchored on it.