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DisCos: Friends Or Foes Of Nigeria’s Energy Industry?



Many Nigerians had great expectations when the federal government announced the transition of the country’s power sector from solely state-owned and managed enterprises to private sector operated companies. Almost five years after, the hopes are turning to bitter experiences. The new owners of the distribution companies (DisCos) are even threatening to declare Force Majeure. FESTUS OKOROMADU writes on the perceived failures of DisCos to advance the industry as expected.

The unending intrigues aimed at manipulating electricity consumers in the country took a new twist recently as a key operator in the industry (the distribution companies) threatened to quit.

The threat may have come as a surprise to some market watchers but to others, it’s a welcome development no thanks to the pains the new operators have inflated on both electricity consumers and other stakeholders in the sector.

According to the report on the proposed intent to quit, the Nigerian Electricity Regulatory Commission (NERC) said 10 out of the 11 electricity distribution companies (DisCos) operating in the country conveyed their notice of force majeure to the Bureau of Public Enterprises (BPE) on the grounds of changes in the laws of the power market.

By implication, the threat can be seen to have emanated from fear of losing the monopolistic grip they already had on the market, thanks to recent regulatory initiatives by design to block the loopholes they had taken advantage of to milk Nigerians dry in the past.

However, Nigerians are sceptical if the DisCos will pull through their threat. Perhaps, if it happens, the current operators will be remembered for doing nothing to improve consumers satisfaction but continuously asking for tariff hike, as well as slamming consumers with crazy bills.

Good enough, NERC Commissioner for Licensing, Legal and Compliance, Mr. Dafe Akpeneye, who made the disclosure, also assured that the commission has initiated immediate regulatory measures to protect the electricity market from potential collapse on the back of the purported execution of the force majeure.

  Why Force Majeure?

The 10 DisCos comprising Abuja, Kano, Kaduna, Enugu, Port Harcourt, Jos, Benin, Ikeja, Ibadan, and Eko, with the exemption Yola DisCo, currently under the control of the federal government, since its initial investor declared a force majeure and handed it back in 2015, are blaming the situation on changes in market regulations.

“The force majeure declaration arose on the ground of change of law and political issues on the new eligible customers’ regulation that was released a couple of weeks ago. The DisCos believe that that is going to result in a significant carve out of a lot of their customers and have declared force majeure on that basis,” Mr. Akpeneye, disclosed.

Explaining the rationale behind the new regulation, he said, “The regulations were issued to ensure that we optimise our generation capacity by ensuring that what the GenCos generate can go to customers through direct contract with the GenCos, thereby bypassing the DisCos. But this is not a total bypass because if the DisCos’ assets would be used, they would be paid for as well as the assets of the TCN.

“We do not think that this is the appropriate step to be taken at this point in time when we are seeking to build confidence and address the issues in the industry, we think it is rather premature and we don’t see this as the way to go,” he stated.

Willingness To Improve Performance

Prior to the private investors’ take-over of the generation and distribution arms of the power sector, generation was said to be the weakest link in the nation’s electricity supply value chain but the situation has changed.

For instance, available records show that generation has improved resulting in capacity increased that has led to over 2,000 megawatts surplus power available but not transmitted due to inability of the transmission company of Nigeria (TCN) to transport same.

However, TCN in recent times say it has increased capacity to transport and now blames the distribution companies for failure to expand its networks to accommodate increased power supply.

NERC’s Failure

The emanating crisis in the power sector has been attributed to NERC’s inability to enforce the regulations guiding the industry. The lacuna has offered the Discos the opportunity on how to milk the consumers without concern for infrastructural development of the sector.

Many stakeholders in the industry believe that the uncontrollable attitude of the DisCos is due to NERC’s refusal to appropriate sanctions on them 





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