The Nigerian Electricity Regulatory Commission (NERC) has approved a sum of N210.14 billion for the Transmission Company of Nigeria (TCN) as its revenue requirement for 2024. This approval follows closely after the national power grid, managed by TCN, collapsed for the first time in 2024, leading to a nationwide blackout.
In an order issued yesterday, NERC stated that this revenue will facilitate TCN’s implementation of its Power Improvement Plan (PIP). The approved requirement comprises N98.24 billion (46.7%) for capital expenditure and N111.90 billion (53.3%) for operational expenses (OPEX).
NERC emphasized that the approved revenue is intended to enable TCN to prudently finance the implementation of the PIP, thereby enhancing service delivery in alignment with the Federal Government of Nigeria’s policy objectives in the Nigeria Electricity Supply Industry (NESI).
Effective from January 1, 2024, TCN is mandated to:
– Establish a PIP Implementation Dedicated Account and remit 46.7% of its monthly market/tariff revenues into this account.
– Utilize the funds accrued to the PIP Implementation Dedicated Account strictly for the implementation of the approved PIPs.
– Provide the Commission with monthly reports regarding the remittance schedule and utilization from the PIP Implementation Dedicated Account.
Additionally, TCN is required to provide an annual update to the PIP reflecting the proposed investment program, which will continuously evolve in alignment with market development and changes to the operating environment.
The Commission also specified that unutilized or imprudently expended annual capital expenditure provisions will be clawed back during subsequent tariff reviews, as per the requirements of the Regulations on Procedure for Electricity Tariff Reviews in the NESI.
Regarding capacity payment, NERC clarified that DisCos’ average tariff was determined considering their projected energy offtake and allocated capacities. DisCos will continue to be invoiced by NBET for capacity charge and energy based on their load allocation and metered energy respectively. If TCN is unable to deliver a DisCo’s load allocation, TCN will be liable for the associated capacity charge. Conversely, if a DisCo fails to take its entire load allocation due to network constraints, the DisCo will be liable for the capacity charge as per its Vesting Contract and the provisions of the applicable Multi-Year Tariff Order (MYTO).