The Nigerian Electricity Regulatory Commission (NERC) yesterday concluded the review of responses submitted by the eight electricity distribution companies (Discos) that were under the threat of losing their operational licenses for reportedly abusing sections of the Electric Power Sector Reform Act (EPSRA) 2005.
At the end of the exercise, two distribution companies – Enugu and Port Harcourt Discos were said to have failed the regulatory agency’s review process.
Both Discos, according to a NERC document, are under serious threat of losing their licenses and their managing directors would have to face a fresh regulatory panel, which would determine their absolute position in this regard.
THISDAY Newspaper reported that the NERC explained in a document it obtained that both Discos failed to meet up with the minimum revenue remittance thresholds, which was the main reason for its intention to revoke the licenses of the eight Discos originally.
It added that Enugu and Port Harcourt Discos equally failed to give material reasons against their licenses withdrawals, adding that a planned public hearing will further investigate their situations and how they could undermine the workings of the country’s electricity market.
Abuja, Benin, Enugu, Ikeja, Kaduna, Kano, Port Harcourt and Yola Discos were notified in October by the NERC of its intention to cancel their licenses after it alleged that they committed various regulatory infractions.
The NERC stated that these Discos breached provisions of the 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.
It also stated that the Discos would have about 60 days to appeal the order which ended on December 7.
According to NERC, Section 74 of the EPSRA and the terms and conditions of the Discos’ licences indicated they breached the law and failed to remit approved minimum amounts of the sector’s revenue to the market.
In defence of its intentions, NERC said it had reasonable cause to believe that the Discos breached these provisions, and it was going to sanction them to amongst other purposes, restore confidence in the electricity market.
However, in a document containing the outcome of its review of the Discos’ responses to it, the commission said that it resolved to consider all responses received in public hearings in accordance with section 24 of the Business Rules which provides that “the commission may hold a public hearing on any matter which it is empowered under the Act and which the commission determines to be of significant interest to the general Public”.
The regulatory agency further added that it wrote to the Discos on November 20, 2019, to tell them that their compliance with the minor remittance directives of the order shall be considered by it as good faith in which case a public hearing shall no longer be necessary but rather, a meeting between it and them to address the issues raised in the cancellation notice.
“The period provided to the Discos within which to show cause in writing as to why their licenses should not be cancelled in accordance with section 74 of the EPSRA ended on Saturday 7 December 2019 but was legally extended to Monday 9 December 2019 by virtue of the provisions of the Interpretation Act.
“All eight Discos met the deadline for the submission of written responses showing cause against the cancellation notice. These responses have been filed at the commission. The remittance to NBET by the Discos to date indicates that: six out of the eight Discos (AEDC, BEDC, IE, KEDCO, YEDC and KAEDCO) met the expected minimum remittance thresholds for the 3 months of July to September 2019.
“Two out of the eight Discos (EEDC and PHEDC) did not meet the expected minimum remittance thresholds for any of the three months of July to September 2019,” said the NERC in the document.
The regulator said that the failure of Discos to comply with expected minimum remittance threshold in the order exposes the power sector to systemic risk which threatens it sustainability, and as such, a public hearing shall be held for the two defaulting Discos on December 19.
It stated that: “The Managing Director/CEO of the Disco shall participate in the hearing in person and shall be responsible for making the presentation on behalf of the Disco and responding to questions raised by the hearing panel.”