Eight DisCos Under Threat Of Losing Licences

The Nigerian Electricity Regulatory Commission may revoke the licences of eight electricity distribution companies.

A sub-committee of NEC headed by the Governor of Kaduna State, Nasir el-Rufai, proposed the forensic audit to the NEC's meeting on Thursday / Photo credit: guardian.ng
A sub-committee of NEC headed by the Governor of Kaduna State, Nasir el-Rufai, proposed the forensic audit to the NEC's meeting on Thursday / Photo credit: guardian.ng

At least eight electricity distribution companies are under the threat of having their licenses cancelled as the Nigerian Electricity Regulatory Commission is yet to withdraw the notice order of an intended license cancellation given to the companies on October 8, 2019.

The eight DisCos, namely; Abuja Electricity Distribution Company, Benin Electricity Distribution Company, Enugu Electricity Distribution Company, Ikeja Electric Plc, Kaduna Electricity Distribution Company, Kano Electricity Distribution, Port Harcourt Electricity Distribution Company and Yola Electricity Distribution Company had a 60-day ultimatum to respond to the order and explain why their licenses should not be cancelled. That 60-day ultimatum ended on December 7, 2019.

NERC spokesman, Usman Arabi would not confirm to The Interview, the status of the cancellation notices to the eight DisCos.

He however said, “We have been meeting with the DisCos since yesterday (December 18, 2019). We also met some today. When we give an order, the onus is on them prove their position against what we are accusing them of. But they have given their responses and made submissions. It is an ongoing process. Whenever we conclude the process. We will let Nigerians know”.

The order in read, “Take notice that pursuant to section 74 of the Electric Power Sector Reform Act(‘EPSORA”) and the terms and conditions of electricity licenses issued to the distribution licensees (“DisCos”) by Nigerian Electricity Regulatory Commission (herein referred to as “NERC” or the “Commission” a notice of intention to cancel distribution licences (“Cancellation Notice”) dates 8 October 2019, was issued to the licensees listed below for breach of the provisions of EPSRA terms and conditions of their respective distribution licences and the 2016-2018 Minor Review of Multi Year Tariff Order (‘MYTO”) and Minimum Remittance Order for the year 2019. (herein called “Minor Review and Minimum Remittance Order”).

From available information on NERC’s website, as at November 5, 2019, the order was still extant and public hearings for the seven of the eight DisCos who had filed petitions against the Minor Review and Minimum Remittance Order had even been scheduled to hold between November 6-11, 2019.

But virtually all the DisCos would later withdraw their petitions and also acknowledge that the petitions did not constitute their written responses to the cancellation notice.

As the DisCos were the designated revenue collection agents in the entire value chain in NESI, NERC, in the notice accused the eight DisCos of failing to meet the minimum remittance threshold specified in the Minor Review and Minimum Remittance Order.

In their responses NERC asked the DisCos to provide monthly balances in their revenue accounts from the date of takeover to the present date, contracts with all revenue collection agents, monthly remittances by all revenue collection agents from date of appointment to date along with fees paid by the DisCos to the collection agents and details of the bilateral contracts and willing buyer/willing seller arrangements along with monthly revenue made from these arrangements.

In addition, NERC asked that the information be submitted individually under oath in depositions by each of the following officers of the eight DisCos: Managing Director/CEOs, Chief Operating Officer, Finance Director/Chief Financial Officer, General Counsel/Head of Legal and also the Head of Compliance.

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