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FG, States, LGs partner to decentralise development of electricity sector

By BusinessNews Staff on August 13, 2014

The federal government ,through two of its key agencies, the Bureau of Public Enterprises (BPE) and Nigerian Electricity Regulatory Commission (NERC), has said it is ready to commence a forensic probe of the extent of financial commitments so far made by the new owners of the various electricity distribution companies in the country.

It said the expected forensic probe was in relation with the cumulative $1.8 billion financial commitment which the new owners of the distribution companies had made as part their five years business expansion plans for the networks during the power assets privatisation programme.

The government noted that the measure was necessary to ensure that the new owners were meeting up with their commitments in reality and not just on papers.

Its disclosure of the intention to monitor the rate of expansion of the various electricity distribution companies came on the same day it sought partnership with states, local governments and related institutions in the development and administration of Nigeria’s electricity sector.

The government stated yesterday at the launch of the National Council on Power (NACOP) in Abuja that it was now willing to concede aspects of the development and administration of Nigeria’s electricity sector to other partners who it advised to key into ongoing reforms in the sector.

The Minister of State, for Power, Mohammed Wakil, said at the inaugural NACOP that the initiative started in 2008 but was delayed until the recent liberalisation of the electricity sector and its somewhat expunge from the federal government’s exclusive list of responsibilities.
He explained that President Jonathan had afterwards approved the constitution of NACOP, having been satisfied that Nigeria’s electricity market was mature enough to assimilate the active participation of other stakeholders in its development.

Similarly, the Director General of BPE, Benjamin Dikki, stated in an update on the status of the privatised successor companies of defunct Power Holding Company of Nigeria (PHCN) at the summit that the government had put in place structured mechanisms to bring investors to account for their $1.8 billion five-year expansion commitments to the distribution networks.

Dikki noted that while the BPE, NERC and ministry of power embark on planned mandatory probe of investors’ commitments to upgrade the networks through agreed and specified annual investments, such mechanisms like NERC’s programmed review of electricity tariff to reflect market realities will not apply to recalcitrant distribution companies.

He said the distribution companies that fail to make its pledged financial commitment to the networks would not be granted the benefits of scheduled tariff reviews among others.

“NERC and BPE have drawn up systemic measures to check and enforce these commitments and this is in addition to structured mechanisms that exist in the market.
“The five-year total CAPEX for distribution companies is almost $1.8 billion and the investment to be made by the Discos cover the commitments they have all made in the following areas; metering (about six million meters), health, safety and environmental practices, reduction in number of customer interruptions due to network faults, new customer connections and network expansion as well as improving customer services and complaints handling procedures,” Dikki said.

He equally added that: “There will be no tariff review for distribution companies that fail to make investments in their networks and attain certain percentage of the Aggregate Technical Commercial and Collection (ATC and C) loss figures that they submitted to us.

“They will bear their losses directly and it is simple because the market is structured to make these efficiencies possible.

“One of the biggest challenges in any privatisation is ensuring that necessary investments are made by the private sector. Many countries experience disappointment when private sector partners fail to make investments as promised, whether for legitimate reasons or due to excuses.

“The power sector will require several billion dollars over the next five years and this money is needed in order to achieve the goals of the power reform program; we have made bidders contractually required to bring in this investment and BPE and the government will be following up on this continuously.

“Consumers should be vigilant to ensure that contractual obligations are enforced by the regulator and other government agencies,” Dikki further stated.

Also, the Chairman of NERC, Dr. Sam Amadi, who said in his presentation that the federal government had in its power sector reform programme, built a strong and coherent electricity market, explained that the commission was on the verge of developing a tight cyber security framework for the country’s electricity market.
Amadi noted that the measure had become necessary to safeguard market transactions in the sector, adding that without such measures, the market would remain vulnerable to potentially risky third-parties manipulations.

[This Day]

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