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Nigeria's New Electricity Market: Challenges and Concerns

Nigeria's new electricity market faces challenges due to increased tariffs and potential state government incapacities.

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Nigeria

Energy SecurityRegulationEconomic ImpactNigeriaElectricityMarket Reform

Nigerian Electricity Regulatory Commission (Nerc)Nigerian Bulk Electricity Trading Plc (Nbet)Ibom PowerMainpowerIbom Utility

Peter UzohoDafe AkpeneyeMichael DadaPresident Muhammadu BuhariPresident Bola Tinubu

What are the potential benefits of the new market?: The new market aims to boost investor confidence, increase investment in the sector, and improve power supply. However, concerns exist about consumers' ability to pay increased tariffs and the capacity of state governments to manage the market.
What are NERC's concerns about the new electricity market regime?: NERC's commissioner, Dafe Akpeneye, expressed doubts about the states' capacity to manage tariff setting and payment, citing their history of non-payment of salaries. He also highlighted the lack of a sunset clause in the Electricity Act addressing potential transition issues.
What are the key features of the new electricity market regime in Nigeria?: The new electricity market regime in Nigeria will involve cost-reflective tariffs, bilateral trading between generation and distribution companies, and state-level regulators. This transition is mandated by the Electricity Act 2023.
What are the main concerns regarding the implementation of the new market?: The major concerns are consumers' ability to afford higher tariffs given Nigeria's economic situation, and the capability of state governments to handle tariff payments and subsidies. The potential for civil unrest due to power outages is also a significant worry.
What is the suggestion from Ibom Power's representative on addressing the challenges of the new market?: Ibom Power's Head of Corporate Communications, Michael Dada, suggests the federal government should consider providing subsidies until the market stabilizes, due to the expected increase in electricity costs and the uncertainty surrounding the states' capacity to handle the transition.

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