The Nigerian Bulk Electricity Trading Plc (NBET) is a Federal Government of Nigeria (FGN) owned public liability company. The Bureau of Public Enterprises and Ministry of Finance Incorporated (20%) are its two shareholders of record with 80% and 20% stakes respectively.
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In line with the “Roadmap to Power Sector Reform” of August 2010, and, in fulfillment of the requirements of EPSRA, the Nigerian Bulk Electricity Trading PLC, (NBET) aka the Bulk Trader, was incorporated on July 29, 2010 as the SPV for carrying out, under license from NERC, the bulk purchase and resale function contemplated by the EPSRA. As such NBET has been set up “engage in the purchase and resale of electric power and ancillary services from independent power producers and from the successor generation companies”
Background
Nigerian’s deficient power sector supply has been a challenge that the past three presidential administrations have steadfastly sought to address. In 2001, the federal Government, in a bid to address the deficiency in power sector supply, adopted the National Electric power policy for the reform of the sector. Following suit, the Electric Power Sector Reform Act (EPSRA), was passed into law in March 2005. A key thrust of the sector tom private sector. Furtherance of this goal, the Act saw the creation of the Power Holding Company Nigeria (PHCN) which assumed the assets, Liabilities and employees of the erstwhile Nigeria Electricity Power Authority (NEPA); the subsequent unbundling of PHCN into 18 successor companies, the establishment of the Rural Electrification Agency (REA) and the provision for the establishment of two special purpose vehicles (SPVs) to undertake electric power trading and management of extant liabilities respectively
History
NBET (aka the Bulk Trader) was incorporated on July 29, 2010, in line with the "Roadmap to Power Sector Reform" and, in fulfillment of the requirements of Electric Power Sector Reform Act (EPSRA), 2005 for a "trading licensee holding a bulk purchase and resale license" to "engage in the purchase and resale of electrical power and ancillary services from independent power producers and from the successor generation companies".
On August 23, 2011, the President, Dr. Goodluck Ebele Jonathan, GCFR, inaugurated a nine-person Board of Directors that included Mr. Rumundaka Wonodi as the Managing Director and Chief Executive Officer.
NBET's power purchase agreements (PPAs) with independent power producers are backed by credit enhancement instruments offered by the FGN.
Objectives
To put in place an effective transaction environment which minimizes risk and allocates it fairly to the parties best able to manage it
To implement a procurement process that is transparent and will result in the economic procurement of needed power
To have all existing and new power capacity under contract by 2016, although the commercial operation date when this capacity comes on line may be latter
To ensure efficient settlement in the short term until this function is subsumed under the Market Operator
To become sustaining as soon as practical thereby minimizing the cost to the FGN
To be ready to novate contracts and wind up as soon as the suppliers are ready to take on their own procurement
To enter into contracts that are well structured and managed in a manner that precludes recourse to any credit guarantee instrument
Services
NBET purchases electricity from the generating companies through Power Purchase Agreements (PPAs) and sells to the distribution companies through Vesting Contracts. The Generating companies include the recently privatized PHCN successor companies, the Niger Delta Power Holding Companies (NIPPs), the already existing Independent Power Producers (IPPs) and the new IPPs.
Mandate includes:
• To put in place an effective transaction environment which minimizes risk and allocates it fairly to the parties best able to manage it.
• To implement a procurement process that is transparent and will result in the economic procurement of needed power.
• To enter into contracts that are well structured and managed in a manner that precludes recourse to any credit guarantee instrument.
• To novate contracts and wind up as soon as the DISCOs are ready to take on their own procurement.