Eight power distribution companies have been given 60 days by the Nigerian Electricity Regulatory Commission to show reasons why their operational licenses should not be withdrawn for reportedly breaking the industry’s law and conditions for which they were recently granted new tariffs. This according to experts have far-reaching impacts on the country’s struggling power market.
The NERC explained that Section 74 of the EPSRA 2005 and the terms and conditions of Discos’ licenses indicated they breached the law and specifically failed to remit approved minimum amounts of the sector’s revenue to the market. “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,” said the NERC in the notice.
Under this framework, the regulator explained that the minimum market remittance threshold for the Discos was determined after deducting the revenue deficit arising from tariff shortfall from the aggregate invoices of the Nigerian Bulk Electricity Trading Plc and Market Operations department of the Transmission Company of Nigeria .
It highlighted that 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.
“The commission notes further that the Discos failed to provide the minimum financial securitisation of their payment obligation to NBET i.e. an adequate and unencumbered letter of credit covering three months based on their minimum payment obligations to NBET and MO that would have addressed the compliance failure.”Following the release of the regulatory notice, industry experts such as a former commissioner for tariff and rates at the NERC, Mr.
However, another market expert who pleaded that his identity be kept anonymous in this report, stated that the NERC would be quite careful in implementing the order because it looked quite a difficult task to implement.
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Source: THISDAY LIVE - 🏆 14. / 51 Read more »
Source: THISDAY LIVE - 🏆 14. / 51 Read more »