NERC Extends Tenure for Electricity Licences to 25 Years

The Nigerian Electricity Regulatory Commission (NERC) has revealed its intention to extend by additional 15 years, operational licences granted to companies that operate in the Nigeria’s Electricity Supply Industry (NESI).

NERC said that the new provision had become necessary as it sought to mitigate the various operational risks associated with licences with short lifespan such as what it had granted to existing operators in the country’s power sector.

To this end, the commission explained that it would now guarantee a 25-year maximum tenure for licences it issues to companies engaged in electricity businesses in the country, after which further renewal of the licences could be granted upon due consideration.

NERC Considers IPP’s Request for Special Power Trade Tariff

The Nigerian Electricity Regulatory Commission (NERC) has said it was considering a request for special power trade tariff made by an Independent Power Producer (IPP) Azura Powers for sale of electricity generated from its 450 megawatts (MW) thermal plant located in Edo state.

Chairman of NERC, Dr. Sam Amadi, stated at a media briefing in Abuja that although the commission was considering the request by the IPP, it would however not engage in hasty decisions that could hurt operation in Nigeria’s emerging power sector.

Amadi disclosed that the request would be open for extensive discussion by stakeholders in the sector, adding that such request was peculiar in a sector that is undergoing a transitional phase in market rules and operations.

The 450MW Azura-Edo IPP is an Open Cycle Gas Turbine (OCGT) power station and an early project to be initiated by Azura Power in its 1000MW IPP facility being developed near Benin City.

The plant is sited on a 100 hectare, large enough to accommodate future expansion of the power plant. In line with extant regulations in the sector, the project has achieved certain key milestones that include acquisition of an IPP operational licence, Certificate of Occupancy (C of O), signing of a project implementation agreement with Edo state government, completion of an environmental and social impact assessment and resettlement action plan up to World Bank standards and grant of transmission connection.

It has also completed its equity financing framework and shortlisted for World Bank Partial Risk Guarantee (PRG) series for funding support. Accordingly, it is in its final rounds of negotiations on Power Purchase Agreement (PPA) with the bulk trader as well as negotiations on Gas Purchase and Transportation Agreements. Azura expects to reach financial closure soon and begin construction in 2013.

Jonathan Finally Constitutes TCN Supervisory Board

President Goodluck Ebele Jonathan through the Secretary to the Government of the Federation (SGF), Senator Anyim Pius Anyim, has announced the constitution of the supervisory board of the Transmission Company of Nigeria (TCN)

Anyim said that the constitution of a supervisory board for TCN is part of efforts by the government to reposition the transmission company towards the attainment of the goals of the power reform programme of the Federal Government. The supervisory board of TCN will be led by  Engr. Hamman Tukur as chairman, while Mr. Akinsola Akinfemiwa will assist him in the capacity of the Vice-Chairman.

Other members include the  Director of Human Resources  Management, Bureau for Public Enterprises (BPE); a representative of the Coordinating Minister for the Economy and Minister of Finance; Director of Power, Ministry of Power; and  a commissioner from the Nigerian Electricity Regulatory Commission (NERC).

The TCN board will also have the representative of the Manufacturers Association of Nigeria (MAN), representative of the generation companies (GENCOS), and a representative of the distribution companies (DISCOS) as members.

PHCN Privatization: Senator warns against asset-stripping

The Chairman, Senate Committee on Power, Senator Phillip Aduda, has urged the Federal Government to prevent investors from stripping electricity firms’ assets when the companies are finally sold.

Aduda, gave the advice while commenting on the progress made in the power sector at a stakeholders’ forum in Lagos. He urged the regulator of the sector — Nigerian Electricity Regulatory Commission and other agencies playing supervisory roles — to adequately monitor happenings in the sector to avoid cases of asset-stripping.

Asset-stripping is the sale of selected assets of an acquired company generally for the purpose of raising money to pay off some of the debt incurred in financing the acquisition. It is also the process of buying an undervalued company with the intent to sell off its assets for a profit. The individual assets of the company, such as its equipment and property, may be more valuable than the company as a whole due to such factors as poor management or poor economic conditions. Asset-stripping could also take the form of buying a company, and then selling off businesses it owns separately.

Power firms need N170bn to provide sufficient meters

The sum of N170bn will be needed to provide meters for all electricity consumers in the country, The Senior Manager, Market Analysis & Compliance, Market, Competition & Rates Division, NERC, Mrs. Kanneng Gwom, said this in a presentation made at a workshop on the power sector post privatization agenda in Abuja.

Gwom said that the calculation of the distribution companies showed that N170bn would be required to close the metering gap in the industry.

Six months after NERC gave electricity distribution companies the marching order to provide meters to all consumers within 18 months, 2.8 million customers out of the 5,172,979 in the records still do not have meters. This means that about 54.15 per cent of registered customers that consume electricity in the country do not have meters.

NERC Faults Budgetary Request for PHCN

The Nigerian Electricity Regulatory Commission (NERC) has said requests for budgetary provisions for the privatized successor companies of the Power Holding Company of Nigeria (PHCN) in the 2013 financial year by the National Assembly was unfounded.

NERC that such budgetary demands and justification for the Federal Government to fund the privatized electricity distribution companies beyond 2012 were not necessary considering the existence of the new Multi Year Tariff Order (MYTO-2) methodology. The commission said in a statement from its Assistant General Manager, Media, Maryam Abubakar, that the tariff methodology which was currently in use had provided for the distribution companies to be self-sustaining, stating that it could confirm that some distribution companies were actually meeting up with its financial obligations.

The House of Representatives had recently decried the lack of budgetary provisions for privatized PHCN successor companies in the 2013 budget.The House argued that additional funding for these electricity companies should be made despite the ongoing privatization process which would see new owners take over the companies by mid-2013. They had explained that there was a need to fund these companies in order for them to meet their capital spending obligations.

But NERC noted that the MYTO-2 was computed in a manner to allow the distribution companies pay for the energy delivered to them, meet up with their operational expenditures (OPEX) as well as their capital expenditures (CAPEX). The commission explained that statistics within its possession shows that since the introduction of the MYTO-2 in June this year, one of the companies, Eko Distribution Company was in November 2012, finally able to meet all its OPEX and CAPEX obligations, as well as settle its energy bill, all without subsidy intervention.