NERC, CBN Consider Ways to Monitor Electricity Market Funds

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James Momoh
Chairman of NERC, Prof. James Momoh

Chineme Okafor in Abuja  

In a bid to curb the poor remittances of power market funds by distribution companies, the Nigerian Electricity Regulatory Commission (NERC) is to set up mechanisms to rectify the Discos’ unruly financial behaviours by monitoring the monthly financial inflows into the country’s power market from the power distribution firms, THISDAY learnt at the weekend. 

According to a source, a new Central Bank of Nigeria (CBN) and NERC-driven presidential initiative on power market revenue would be rolled out soon to ensure that the Discos no longer default in their minimum monthly remittances to the market.

The source said the CBN was instrumental to NERC’s decision to punish the eight Discos for their poor remittance to the market.

The source added that the CBN being the power sector’s largest creditor had insisted that NERC should enforce the regulatory action against the Discos to sanitise the power market ahead of the N600 billion fresh loan it plans to extend to the sector soon.

 “The presidential initiative will put an end to all this rubbish because there will be cashless collection and billing – an automation system that will ensure that you won’t have to deal with all these. It is just like when you put your money in the bank it would be known. The central bank knows how much you put in the bank and that will enable the NERC to know how much you have,” the source stated.

Meanwhile, NERC yesterday said it had a good case against the eight Discos it recently issued notices of intention to withdraw their operational licences for reportedly going against the terms of their operation in the Electric Power Sector Reform Act (EPSRA) 2005.

It said before it issued the licences withdrawal notices to the Discos, it had met all of the conditions that would guarantee the Discos efficient operations, adding that on the basis of that, none of them could fault its decision or find loopholes to legally manipulate the process.

In a notice issued on October 9, NERC had signified its intention to cancel the licences of the eight Discos, comprising the Abuja Electricity Distribution Company Plc (AEDC); Benin Electricity Distribution Company Plc (BEDC); Enugu Electricity Distribution Company Plc (EEDC); Ikeja Electric Plc (IE); Kaduna Electricity Distribution Company Plc (KAEDCO); Kano Electricity Distribution Company Plc (KEDCO); Port Harcourt Electricity Distribution Company Plc (PHEDC) and Yola Electricity Distribution Company Plc (YEDC).

It said the terms of the licences they breached bordered on their execution of the 2016 to 2018 minor review of the Multi Year Tariff Order (MYTO) and the minimum remittance order for 2019, adding that it had written to the Discos and was ready to give them up to 60 days to convince it not to revoke their licences.

NERC added that Section 74 of the EPSRA and the terms and conditions of Discos’ licences indicated they breached the law and failed to remit approved minimum amounts of the sector’s revenue to the market.

Chairman of NERC, Prof. James Momoh, told THISDAY yesterday that some of the affected Discos had shown interest to meet with the regulator to resolve the issues.

Momoh said while the NERC would be open to discussions with them, it would not backtrack on its order and intention. 

He also said the regulator was not at war with the Discos but wanted to prevent operations in the power market from getting chaotic.

According to him, the NERC has also taken care to guard itself and actions from potential legal manipulations by the Discos.

“We are not trying to go back obviously. We are ready to meet them one-on-one if they have issues or concerns, and to assist them to meet the requirements. It is not like some quarrel between us, it is just a matter of the facts and responsibilities in the Act which we have to carry on to ensure that the market is stable otherwise there will be chaos if we don’t take such action.

“We are available to talk if any of them have issues or queries. They are all getting ready to come over one-on-one, and we will be very glad to meet with them. They know the outcome and our prayer is that they will do the needful to get the market working and customers happy,” he stated

Asked if the licences cancellation order was without prejudice to the operations of the Discos, Momoh said: “The reason for the order is very clear and the issues as well.

“We made it very clear that we couldn’t have taken action on that order without recognising past issues – in 2015 when the commission tried to do cost reflective tariff, there was a court case that came out of that and until the court finally gave us the right to continue. We have all the issues sorted and after that is all over, we were able to roll out and with the minimum remittance.

“These were to get them ready within two years to become effective. Anything that will help any business to work out, we gave them, and we are not just going to allow a loophole where anyone would take advantage of to say we didn’t do our work.

“We took care of all the things that will limit the ability of the commission to move forward and once that is done, we had series of meetings with their core investors and management team and they were all happy.”

Momoh alleged that the Discos had repeatedly acted unruly for years, but that NERC would put an end to such acts.