Performance Contracts for Power Utilities in Nigeria
The Federal Government of Nigeria (FGN) is pursuing a broad-based policy on power sector reforms to steer it towards an efficient, competitive and market driven sector.
Prescribing and enforcement of performance standards for generation, transmission and distribution companies is an extremely important part of the oversight and regulatory function, and both FGN and Nigerian Electricity Regulatory Commission – NERC have an abiding interest in seeing the operations of electric utilities improve in accordance with agreed benchmarks.
The development of acceptable benchmarks for these entities is a challenge, given years of neglect and under-investment. Similarly, developing an enforceable mechanism for performance benchmarks, given that all the electric utilities are currently state-owned, poses its own difficulties. In this context, the World Bank hired Mercados – Aries International to develop a comprehensive framework for performance contracts for power sector in Nigeria.
Mercados – Aries International was responsible for analyzing the existing situation in the power sector; definition of the performance indicators for generation, transmission and distribution companies; assessment of the current state of installed public sector generation in Nigeria; assessment of the current state of transmission and distribution network in Nigeria; benchmarks on performance indicators and recommendations on possible targets; and drafting of template performance contracts for generation, transmission and distribution entities.
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