Nigeria: Eight DisCos' Await Fate As Nerc Reviews Responses to Queries

11 December 2019

With the expiration of the December 7 deadline issued by the Nigerian Electricity Regulatory Commission (NERC) for eight electricity distribution companies (Discos) to respond to the enforcement action against them or have their licences revoked, the regulatory agency has received the written responses of the distribution firms, THISDAY has learnt.

THISDAY gathered that NERC received the written defences from eight electricity Discos whose licences might be revoked.

It was also learnt that the commission has begun reviewing the documents submitted to it by the Discos and would soon conclude the process.

Multiple sources at the regulatory commission, who spoke to THISDAY on condition of anonymity, stated that all the eight Discos met the December 7 deadline.

They explained that the documents submitted by the Discos were voluminous, and would require the commission to carefully review their submissions after which it would take its decision.

"The deadline was on December 7, and all of them (Discos) were able to meet up with that. However, the documents are now being reviewed by the NERC team selected to do that.

"The documents are voluminous; they require that NERC carefully reviews them. But I am sure the decision would be made known to Nigerians soon because the team are working hard on this," said one of the sources.

The NERC had given the eight Discos until December 7 to respond to its notice of intention to revoke their operational licences.

The Discos- Abuja, Benin, Enugu, Ikeja, Kaduna, Kano, Port Harcourt and Yola- were accused by the NERC of committing various regulatory infractions.

They were in October issued notices of intention to cancel their distribution licences by the NERC, which alleged that they breached provisions of the Electric Power Sector Reform Act (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.

NERC had also stated that the Discos would have about 60 days to appeal the order.

According to NERC, Section 74 of the EPSRA and the terms and conditions of Discos' licences indicated that they breached the law and failed to remit approved minimum amounts of the sector's revenue to the market.

NERC said it had reasonable cause to believe that the Discos breached the provisions of the EPSRA, terms and conditions of their respective distribution licences, the 2016 to 2018 minor review of the MYTO and the minimum remittance order for 2019.

It said in October that: "The commission considers the actions of the aforementioned Discos as manifest and flagrant breaches of EPSRA, terms and conditions of their respective distribution licences and the order; and therefore requires each of them to show cause in writing within 60 days from the date of receipt of this notice as to why their licences should not be cancelled in accordance with section 74 of EPSRA."

The commission said the objective of the order was to place the Discos on a path of meeting their contractual and performance obligations to the power market with the recognition of tariff shortfalls arising from revenue under-recovery and the exclusion of 2017 and 2018 as years of mutual non-performance in the performance agreement.

Putting their remittance failures under context, the NERC stated that Abuja Discos for instance achieved just 30 per cent instead of 45 per cent minimum remittance approved for it; Benin attained 18 per cent instead of 30 per cent; Enugu achieved 10 as against 42 per cent; Ikeja did 40 as against 49 per cent and Kano did 11 instead of 18 per cent.

Kaduna also did 24 per cent and not 33 per cent approved for it; Port Harcourt did 10 per cent instead of 24 per cent, while Yola remitted just 10 per cent instead of 13 per cent approved as its minimum revenue remittance to the power market.

Electricity Workers to Meet on Planned Strike

Following the expiration of their 21-day ultimatum given to the federal government to address their grievances, electricity workers under the auspices of the National Union of Electricity Employees (NUEE) will meet in the next 48 hours to decide on possible industrial action to press home their demands.

The workers have threatened to disrupt electricity supply nationwide if the government failed to listen to address their plight within 21 days.

Their grievances include non-payment of salary arrears, remittance of pension deductions and retrenchment of staff.

With the expiration of the ultimatum yesterday, the National President of the union, Mr. Joe Ajaero, told THISDAY that the union would meet within 48 hours to decide whether to shut down power generating plants or not.

"We have exhausted all available channels for resolving the issue. The labour laws provide that workers should give 14-day notice, which can be extended by one week. But we gave 21-day notice and even the letter was dated November 7, 2019. So, the notice is even more than what the law requires from us. Nobody can accuse us of not given enough notice. We will meet today or tomorrow to take action. We can shut down any moment," he explained.

When asked if the federal government had reached out to the union, Ajaero said: "the official that responded to our letter from the ministry said that the new minister was not properly briefed on the issues. Does it mean Fashola (Babatunde Fashola) did not hand over properly to him?"

Ajaero had told THISDAY that the union made sure that it sent its letter to all the relevant authorities in the power sector, including the security agencies.

He also said the strike notice was published in one of the national dailies to ensure that no one would claim not to have seen it.

He said: "We gave a strike notice and it expires tomorrow (yesterday). It is now left for us to decide when to commence strike action based on our strategy."

Ajaero who flayed the manner the Ministry of Power is treating the workers' complaints, said the union had given more than enough opportunity for dialogue on the issues but that nothing was forthcoming from the government.

He said ministry officials first responded to the union's letter saying that the minister "travelled out of the country but later said that their letter was on the minister's table and that he is looking into it.

"The strike letter was sent to the Ministry of Power and there was one letter they wrote, saying the minister is not in the country and that he is still studying the situation. They said the minister will look into everything, that is all," he added.

When asked whether the workers would embark on a strike after today, Ajaero said due to sensitive nature of the sector, the union would have to adopt a strategy to carry out its threat.

"It is our action that will show if we are ready or not. We can't continue to issue threats without action," he stated.

He, however, explained that one of the stakeholders, the Eko Distribution Company, had reached out to the union showing areas it has complied with the workers' demands.

Ajaero said notwithstanding the efforts of the Eko Disco to partially meet the demand of the workers, its services would still be affected when they go on strike because it would affect the power generation companies supplying electricity to the Discos.

The Minister of Labour and Employment, Senator Chris Ngige, couldn't be reached as at the time of filing this report.

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