Power distribution companies that are performing below stipulated standards in the Nigeria Electricity Supply Industry are going to lose 50 per cent of their operating expenditures, the Federal Government declared on Monday.
It made the declaration through the Nigerian Electricity Regulatory Commission at the 1st NESI Stakeholders Meeting of 2024 in Lagos, stressing that the individual performances of the Discos shall be examined on a case-by-case basis going forward.
Officially, Nigeria has 11 power distribution companies that supply electricity to over 12 million registered power users across the country.
The successor Discos were privatised in November 2013, alongside the power generation companies that produce the electricity supplied to the national grid.
The Transmission Company of Nigeria transmits the power produced by the Gencos to the Discos for onward distribution to users nationwide.
The sector has been plagued by a series of concerns, top among which is the issue of poor liquidity, and complains around the inability of Discos to make adequate financial remittances to the industry to guarantee power production.
In a series of posts on the power sector regulator’s official X handle on Monday, it was stated that the Vice Chairman of NERC, Musiliu Useni, urged Discos to improve their performance or suffer consequences.
He was quoted as saying, “NERC will look at performance on a case-by-case basis. Sanctions and actions will not be the same. Ensure that you (Discos) improve your efficiency.
“If your efficiency is at the level expected, you will get your full OPEX (operating expenditure). If you don’t perform, you will only get 50 per cent of your admin OPEX”.
NERC, as the regulator of the power sector, has the power to approve the operating expenditures of Discos and other key operators in the industry, and it has been doing this over the years.
Speaking on the operationalisation of Ministries Departments and Agencies centralised billing platform, Useni told his audience that this was being handled by the finance ministry.
“A payment system was put in place for critical MDAs, with an agreement for the central settlement of their electricity consumption by the Ministry of Finance, which would have access to their meter readings”, he stated.
He further noted that the sector must be run sustainably in terms of payment obligations by various operators.
“We need to ensure that sustainable payment going forward is in place. Market rules are clear, but they don’t envisage there would be tariff shortfall or subsidy”, Useni stated.
The commission stated that the meeting was expected to provide strategic direction for the NESI, review compliance since the last meeting, and give licensees a platform to discuss issues.
Also speaking at the meeting, the Commissioner, Engineering, Performance and Monitoring, NERC, Chidi Ike, said the responsibilities of licensees in the NESI shall be examined.
“We are planning to organise a comprehensive workshop for licensees to examine their responsibilities. The workshop will cover the legal framework, grid code, HSE (health, safety and environment), and everything they need to know, following which there will be sanctions for non-compliance”, he stated.
He expressed worry over the construction of houses under transmission lines and warned Discos to desist from supplying such structures with power.
“You see swathes of communities under transmission lines. Discos supply power to them despite them being in clear contravention of the Right of Way of TCN. We are going to focus on those areas and make sure that Discos aren’t going to benefit from any form of illegality”, Ike stated.
On his part, the Assistant General Manager, Engineering, Performance and Monitoring, NERC, John Joseph, highlighted the leading cause of accidents during his presentation on the Health and Safety Performance of the NESI in 2022 and 2023.
“38 per cent of accidents in 2023 were caused by unsafe conditions. There are safety guidelines that should be followed but are jettisoned instead, leading to accidents”, he stated.
