The Kano Electricity Distribution Company (KEDCO) has been suspended by the Transmission Company of Nigeria from the Market Operator-administered market after going against one of the rules in the Market Participation Agreement.
The Kano DisCo had been notified of its infringement on security cover increase, but the company failed to make the required payment. The renewal of security cover serves as a form of guarantee of payment for all amounts due from the participant to the Market Operator.
This action contravenes one of the clauses in the Market Participation Agreement. According to a statement retweeted by TCN’s twitter account (@TCN_NIGERIA), participants (DisCos) must ensure they make security deposit when so required of an amount established by the Market Operator.
The Nigerian Electricity Market Operator has today, 21st July issued Suspension and Disconnection Orders to Kano Electricity Distribution Company, KEDCO, from the Electricity Market for default in the Market Conditions/Market Participation Agreements.@TCN_NIGERIA @kedcoplc @FMPWH pic.twitter.com/ALtlWRpx3E
— onem Nigeria (@onemNigeria) July 21, 2019
TCN had informed Kano DisCo of the default in the first week of July 2019, but the company didn’t remedy the default as required during the time-frame given by the market operator.
Through the Market Rules of 45.3.7, TCN exercised its power to issue a suspension order to a participant, suspending or restricting all or any of the participant’s rights to participate in the Market Operator Administered Market.
The statement also disclosed that, in the suspension order, a paragraph must contain a disconnection order to the transmitter or distributor of the transmission system or distribution system the participant is connected. The distributor should be directed to disconnect the relevant facilities or equipment of the suspended participant.
KEDCO had a fighting chance: The suspension was granted by the Market Operator Enforcement Panel, which was constituted by the Market Operator after KEDCO failed to appear before a hearing the company had requested for, in order to give reasons why it shouldn’t be suspended.
The hearing was slated for July 19, 2019, but representatives of the company didn’t appear before the panel, neither was a letter written to explain their absence.
What KEDCO stands to lose: Apart from its disconnection from facilities, payment due to the company will be withheld by the Market Operator.