Eight Discos Know Fate of Licence on Saturday

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Chineme Okafor in Abuja

The Nigerian Electricity Regulatory Commission (NERC) is expected to on Saturday disclose its final decision on the status of the licence revocation notice it issued to eight electricity distribution companies (Discos), THISDAY has learnt.

The Discos – Abuja; Benin; Enugu; Ikeja; Kaduna; Kano; Port Harcourt; and Yola, were alleged by the NERC to have committed various regulatory infractions.

They were in October issued notices of intention to cancel their distribution licences by the NERC, which stated that they breached provisions of the Electric Power Sector Reform Act (EPSRA) 2005; terms and conditions of their respective distribution licences; and the 2016 to 2018 minor review of the Multi Year Tariff Order (MYTO) and Minimum Remittance Order for 2019.

NERC also stated that the Discos would have about 60 days to appeal the order. The timeline given by the regulator for the Discos to appeal the license revocation would however end on December 7, and sources in the NERC informed THISDAY yesterday that the commission was under pressure on the development.

They stated that the final decisions were known only to the commissioners of the NERC, which in a follow up on its regulatory order to the Discos stated that they (Discos) initially filed petitions against the MYTO Order, but six of them subsequently withdrew their petitions to pursue amicable resolution of the issues.

However, one of the sources explained that the workers at the commission were eager to see the “next chain of events starting from December 7, 2019 because they will turn out to be another watershed moment in the progress and development of Nigeria’s power sector.”

The sources also explained that the workers were sceptical of what the final decision of the commission would be, adding that their fears stemmed from their claims that the NERC has a poor history on enforcement actions.

According to NERC, 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.

NERC said it has reasonable cause to believe that the Discos breached the provisions of the EPSRA, terms and conditions of their respective distribution licences, the 2016 to 2018 minor review of the MYTO, and the minimum remittance order for 2019.

It said in October that: “The commission considers the actions of the aforementioned Discos as manifest and flagrant breaches of EPSRA, terms and conditions of their respective distribution licences and the order; and therefore requires each of them to show cause in writing within 60 days from the date of receipt of this notice as to why their licences should not be cancelled in accordance with section 74 of EPSRA.”

The commission said the objective of the order was to place the Discos on a path of meeting their contractual and performance obligations to the power market with the recognition of tariff shortfalls arising from revenue under-recovery and the exclusion of 2017 and 2018 as years of mutual non-performance in the performance agreement.

Putting their remittance failures under context, the NERC stated that Abuja Discos for instance achieved just 30 per cent instead of 45 per cent minimum remittance approved for it; Benin attained 18 per cent instead of 30 per cent; Enugu achieved 10 as against 42 per cent; Ikeja did 40 as against 49 per cent, and Kano did 11 instead of 18 per cent.

Kaduna also did 24 per cent and not 33 per cent approved for it; Port Harcourt did 10 per cent instead of 24 per cent, while Yola remitted just 10 per cent instead of 13 per cent approved as its minimum revenue remittance to the power market.