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N30.1bn Debt: FG To Cancel Abuja, Kaduna, Kano, Ikeja, Four Discos’ Licenses

9 October 2019 National News

The Nigerian Electricity Regulatory Commission (NERC) has notified eight power Distribution Companies (DisCos) on its intent to cancel their licences in 60 days after they accumulated N30.1 billion energy invoice debts for July 2019.

In a notice signed by Dafe Akpeneye, the Commissioner for Legal, Licencing and Compliance, published today, NERC directed Abuja, Benin, Enugu, Ikeja, Kano, Kaduna, P/Harcourt, and Yola DisCos to prove why their licences should not be withdrawn in two months.

“The remittances to the Nigerian Bulk Electricity Trading Plc (NBET) shows that the DisCos have failed to meet the expected minimum remittance thresholds for the July 2019 billing cycle,” it said.

NERC said the eight DisCos received N36.1bn invoice from NBET for the energy they received in July 2019, they only remitted N5.91bn, representing just 16 percent performance. They are getting NERC sanction for the balance of N30.1bn.

According to reports, this is the first time NERC is implementing the Transitional Electricity Market (TEM) Rule that mandates DisCos to pay 100% for energy and ancillary services.

NERC is now wielding its hammer on DisCos with threat of canceling their licence, first time after the power sector privatization of 2013. By November 1, 2019, the privatization would have clocked six years but energy payment by DisCos according to NBET records had dropped to paltry 30% average for over three years with more defaults as they ought to have a three months guarantee or Letter of Credit (LC) with NBET anytime.

Due to what the Transmission Company of Nigeria (TCN) described as electricity market indiscipline by the DisCos which worsened in the same July 2019, TCN – Market Operator (MO) suspended six DisCos including Kano, Ikeja, P/Harcourt and Enugu DisCos from the market in August.

They were only reinstated after they had increased their bank guarantee or LCs to guarantee 100% payment for the ancillary services provided by TCN’s MO and System Operator (SO); NBET and NERC for at least three months. However, the bulk payment for the energy wheeled to them which is payable to NBET has continually suffered.

The Commission notes that the failure of the DisCos to comply with the minimum remittance exposes the Nigerian Electricity Supply Industry (NESI) to risks that threatens sustenance of other parts of the value chain, and the ability to improve service delivery to electricity consumers.

Source; Daily Trust News

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