The Federal Government of Nigeria (FGN), through the Nigerian Electricity Regulatory Commission (NERC) may withdraw the licences of eight power distribution companies (DisCos) over breaches of some provisions of the Electric Power Sector Reform Act.
According to the regulatory commission, the eight power firms include Abuja, Benin, Enugu, Ikeja, Kaduna, Kano, Port Harcourt and Yola Electricity Distribution Companies.
The details: In a notice posted on its website, the power sector regulator said it intended to cancel licences issued to the eight DisCos in pursuant to Section 74 of the EPSR Act.
According to NERC, the licences of the 8 DisCos might be withdrawn due to three main fundamental reasons. Essentially, NERC stated that the listed firms had breached the provisions of the Electric Power Sector Reform Act (ESPRA), terms and conditions of their respective distribution licences and the Remittance Order of the year 2019.
Under the Power Sector Recovery Plan (PSRP) approved by the Federal Government, DisCos are liable to relevant penalties/sanctions for failure to meet the minimum remittances requirement in any payment cycle in line with the provisions of its respective contracts with NBET, Market operator (MO) and provisions of the Market Rules.
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Highlighting the breaches, NERC stated that the remittances of the 8 DisCos to Nigerian Bulk Electricity Trading (NBET) in July 2019 billing cycle showed failure to meet the expected minimum remittance thresholds. Basically, the commission’s notice showed that all the listed DisCos failed to meet the expected minimum remittance in July.
A look at the report shows that three other DisCos remitted 10% during the period while the highest remittance was 40%, as they all fell short of the expected minimum remittance stipulated by NERC.
It was further disclosed that the objective of Order was to place the DisCos on a path of meeting their contractual/performance obligations to Nigerian Electricity Regulatory Commission (NESI) with the recognition of tariff shortfalls arising from revenue under-recovery.
The commission also said that the failure of DisCos to comply with expected minimum remittance thresholds in the Order exposed NESI to systemic risk that threatened the sustainability of other parts of the value chain, and the ability to improve service delivery to consumers.
Following the breaches, the regulatory commission stated that all the DisCos must show cause in writing within 60 days from the date of receipt of the notice, detailing reasons why their respective licenses should not be cancelled in accordance of the EPSRA law.