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ARTICLE · 05 JULY 2023

Power Sector Watch | Q2 Updates

KPMG in Nigeria
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The bilateral power contracts introduced by NERC to aid the direct sale of power from Generation Companies to Distribution Companies may be challenged by the liquidity challenges faced by most of the DisCos.

NigeriaEnergy and Natural Resources
Ayo Salami
Ayo Salami
Ayo Soyinka
Ayo Soyinka
Martins Arogie
Martins Arogie

Liquidity challenges of Distribution Companies pose high risk to the execution of bilateral power contract1

The bilateral power contracts introduced by Nigerian Electricity Regulatory Commission NERC to aid the direct sale of power from Generation Companies (GenCos) to Distribution Companies (DisCos) may be challenged by the liquidity challenges faced by most of the DisCos.

NERC had earlier in the year, instructed the 3 biggest DisCos - Eko, Ikeja and Abuja DisCos, to commence the implementation of bilateral contracts with GenCos of their choice effective 31 March 2023. The bilateral power contract follows an unsuccessful implementation of the partial activation exercise of the Power Purchase Agreement (PPA) in June 2022 which was overseen by NERC and the Nigerian Bulk Electricity Trading Plc (NBET). The PPA created a long-term contract with GenCos with conditions for purchase of electricity generated by the companies. The PPA was not fully implemented due to

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