September last year, the country’s power sector made history when President Goodluck Jonathan privatised the sector by handing over the control of 15 power generation and distribution companies to the private sector.
“The transitional electricity market is one whereby we expect that all the trades within the industry will be governed by contracts,” Rumundaka Wonodi, CEO and MD of Nigerian Bulk Electricity Trading told CNBC Africa.
(READ MORE: Can Nigeria achieve its 2014 power target?)
Despite the extraordinary level of investments the power sector received and an increase in electricity tariffs, power supply in Nigeria is still very unstable and the situation might actually be getting worse.
“Unfortunately that has not come into play since the handing over of the assets to the private sector and what we then have in place is what you call the interim rules that was designed by the regulator to govern the market until there is clarity about how things will work,” he explained.
Wonodi explained that when the interim rules were initially designed, the regulator set a three months or four months period for the interim rules but unfortunately some of the conditions that they expected to meet before then to move into the transitional electricity market didn’t happen.
(WATCH VIDEO: Progress made in the Nigerian power sector)
“One of the things that needed to be done, is to conduct some law studies that will actually define or redefine the input into the retail tariff which the discos had complained were not as accurate as what was promised under the tariff released by the regulator in 2012,” he said.
“The distribution companies continue to make the argument that the tariff is not cost reflective. It’s how to address this that is the issue,” he added.