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Anxiety in power sector as Abuja, Ikeja, Benin discos, others await verdict on licence cancellation

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NERC

The December 7 deadline for Ikeja, Benin and other six distribution companies to submit their written responses why their licences should not be cancelled by the Nigerian Electricity Regulatory Commission (NERC) declared recently, ecpires today.

This is bedide the federal government’s recent pronouncement that it will review the privatisation exercise, a development that is causing jitters among the operators

The commission had issued a cancellation notice to eight power distribution companies in October this year and mandated them to respond within 60 days, otherwise their licences would be cancelled.

It named the eight firms as Abuja, Benin, Enugu, Ikeja, Kaduna, Kano, Port Harcourt and Yola Discos.

They were said to have breached the terms and conditions of their respective distribution licences based on their provisions.

According to NERC, ‘’The cancellation notice remains extant and the eight Discos are still required to show cause in writing within 60 days from the date of receipt thereof as to why their licenses should not be cancelled in accordance with section 74 of EPSRA,’’

The commission also requires the affected Discos to address the issues of optimal utilisation of resources and efficient operation, technical partners from takeover to date, among others, in their written responses.

Although the operators are waiting with bated breath for the outcome, some of them are rather blaming the government for unnecessary interference and lack of level playing field for their operations.

Indeed, their debts to the banks have contributed to the rising Non Performing Loans (NPLs) beyond the five percent industry threshold, while the affected firms have been unable to meet the minimum remittance threshold specified in the order.
Besides generation and transmission, distribution companies (DisCos) lack the financial and technical capabilities required, thereby resulting in their inability to pay for power which generation companies (GenCos) deliver to the grid.

Some analysts contend that the objective of privatisation was not to achieve the highest financial bids, but rather to get capable companies that can achieve the lowest average technical commercial and collection losses within five years, stressing that there is need to break the country’s power distribution companies into smaller and more effective manageable companies for optimal performance

In fact, the lack of electricity meters or lack of proper metering of premises and the attendant consequences have continued to impoverish Nigerians.

NERC also admitted that the debt soared between 2015 and 2018 due to lack of a cost-reflective electricity tariff, or its failure to review and approve the right tariffs for the Discos.

But, as the deadline draws nearer and with barrage of enquiries and inquests into the operational efficiency of the Discos, most of the investors are rather not in the best frame of mind for now but rather thinking on the fate of their investments. Some have rather embarked on intensive lobbying of politicians and influential Nigerians to prevail on the authorities to soft pedal. How this will play out is what Nigerians and the world are waiting to se.

But, the Discos themselves are not helping matters as most of them are either enmeshed in battles with their consumers, staff or state governments over inefficiencies and exploitation.

While Ikeja Discos, for instance, has continued to deny its customers the prepaid meters, it has continued to enjoy free funds from estimated billings, mostly for services not rendered..