NERC approves 450MW deal to avert Zungeru plant shutdown

The Nigerian Electricity Regulatory Commission has accepted a deal for the procurement of 450 megawatts of electricity from Zungeru Hydro Electricity Generation Company Limited.

The directive which has been issued further to the Commission’s Order No. NERC/2024/044 on the “Transmission System Dispatch Operation, Cross- Border Supply and Related Matters” and in the overriding public interest of ensuring continuous improvement in the supply of electricity to Nigerians, was to ensure that the grids are stable and to prevent shutdown of the newly completed Zungeru hydropower plant pending when it gets off-takers.

The NERC, in a directive signed by its Vice Chairman, Musiliu Oseni, read in part: “Whereas Zungeru Hydro Electricity Generation Company currently has no contract and had indicated its decision to shut down the plant after the capacity test pending the finalisation of contractual arrangements with her prospective off-takers.

"The Commission, however, considers it necessary to ensure that the power plant remains on the grid and continues to inject power to improve service delivery to electricity consumers in Nigeria.

“Given the overriding public interest, the Commission has granted a special dispensation that permits the Independent System Operator of the Transmission Company of Nigeria to assume responsibility for the administration of settlement for power wheeled from ZHEGC for an initial period of 105 days commencing from 0.00Hrs of the 16th May 2024.”

To avoid the perpetual practice of limiting DisCos load offtake as a corrective mechanism for system imbalances, the commission “directs the TCN-ISO to enter into an interim energy sales agreement with ZHEGC for up to 450MW of energy and capacity to address the imbalances currently experienced between generation and offtake, thereby further strengthening grid management. The agreement shall be on a best-effort basis.

“The commencement date for the interim agreement is 16 of May 2024 and shall be in effect till the 31 of August 2024 in the first instance”.

On the administration of the agreement, the directive stated, “For every settlement cycle following the commencement of the agreement, ZHEGC shall invoice the Market Operator for capacity and energy based on the metered energy generated as contained in the Final Settlement Statement. The MO shall issue two settlement statements to the DisCos; one for the settlement of the transmission and market administration services. The second invoice shall reflect the energy from ZHEGC allocated to the DisCos on a pro-rata basis using the total energy offtake by DisCos for the month.

“The settlement for the energy supplied from ZHEGC shall be prioritised from the market revenue administered by Nigeria Electricity Supply Industry Stabilisation Securities Limited.

“NESI-SSL shall pay the Market Operator the full value of ZHEGC’s energy invoiced to the DisCos for onward payment to ZHEGC in line with the terms of the interim energy sales agreement.”

BEB