TCN May Sue NERC for Transferring 132kV Customers to Discos

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Stories by Chineme Okafor in Abuja
The Transmission Company of Nigeria (TCN) has disclosed that it may institute a legal action against the Nigerian Electricity Regulatory Commission (NERC) for ceding electricity consumers on the 132 kilovolt (kV) power line to electricity distribution companies (Discos).

TCN’s Managing Director, Mr. Usman Mohammed, stated at a meeting in Kanji power station, that the company had complained to the NERC about the development, adding that the decision of the regulatory commission on the 132kV lines was against the letters of the Electric Power Sector Reform Act (EPSRA) 2005.

Mohammed, noted that in March of this year, the TCN made representation to the NERC on the issue at a regulatory public hearing, and has since waited for NERC to make a decision which he said should be in tandem with the dictates of the EPSRA.

According to him, if the NERC fails to act honestly on the issue, the TCN would be willing take legal actions against it to correct the alleged breach of the sector’s law.

He spoke in response to a suggestion by PricewaterhouseCoppers (PwC) that about 50 per cent of electricity generated in the country by generation companies (Gencos) be supplied to manufacturing outfits through the Discos, to reactivate the financially challenged power sector and engender economic development.
“If you look at the TEM (Transitional Electricity Market) Order of 2015 which transferred 132kV customers to Discos, we challenged it.

“Actually, we did a legal opinion that showed we have a 99 per cent chance of winning if we take NERC to court and that was why NERC was forced call a public hearing on that decision.

“The public hearing was held in March and up till today, NERC did not respond because we are right. If you look at the Act of 2005, you see that it is very clear (that) a Disco is any network under the transmission network.

“And the tariff methodology in the Act clearly stated that if somebody didn’t add value to anything, you don’t charge, and if you look at the 132kV customers, what has the Discos added to them, nothing,” he said.

Mohammed further stated: “So, it does not make sense for us to say that 50 per cent (of electricity) should be sold to the industries through the Discos. That is contravening the law. We are still waiting for NERC, and if they don’t do the right things, we are ready to take them to court.”

He explained that Nigeria’s industries would not compete well with that of the neighbouring countries in West Africa, if the Discos were allowed to supply to them such amount of electricity.
“As a nation, we have neighbours and what is the comparative advantage of Nigeria over them? If we are talking in terms of doing business, we are not comparable to any of the countries around us because they are unitary states while we are a federation.

“If you go to Ghana now and get a permit to do business in Kumasi, you don’t need another permit to do business in another state (in Ghana). But here, we have multiple chains and taxation.
“The only thing we have as comparative advantage is that we are able to generate electricity cheaper here. So, why should we transfer the inefficiencies of our Discos to our industries when we expect our industries to compete with the rest of our neighbours,” he asked.

Mohammed said: “By transferring the 132kV customers to the Discos, we have succeeded in making them lazy. If you are doing about 80 per cent, and you end up doing 50 per cent, have you not become lazy?

“The transfer of 132kV to Discos increased the liquidity crisis in the sector and reduced the intakes of the industries which were taking between 40 and 50 per cents but they are taking less now.”
He called for a swift evolution of the power market to a contract-based one where every of its components would be held to their obligations.

According to him: “If we are going to transit to a sustainable market, we are supposed to move to willing buyer-willing seller. Why should we continue on this process?
“A willing buyer-willing seller means that those industries contract with the generators and TCN will wheel the electricity for them with contingent liability.”