Revocation Of Discos Licences: Why Electricity Equipment Should Be Protected
Posted: 21/Oct/2019

I am appealing to President Muhammadu Buhari to give adequate protection to electricity equipment before the revocation of licences of power distribution companies. Electricity equipment must be protectedd from vandals and internal sabotage before the revocation of licences of power distribution companies and the implementation of power agreement between Nigeria and Siemens of Germany. 
The Nigerian Electricity Regulatory Commission, NERC, recently notified eight power distribution companies, DisCos, about the withdrawal of their licences as the nation continues to grapple with persistent power outages and unreliable electricity supply. 
President Buhari needs to establish and inaugurate  electricity regulatory committees in all the states to monitor suspicious activities on any electricity installation or equipment, and report to state governments and the Federal Government. 
Factually, issues of vandalism will be a major contribution to the challenges that the discos are currently experiencing in Transmission Company of Nigeria’s,TCN’s, infrastructure and technical limitations in wheeling power to the proper areas of a Disco’s geographical footprint after revocation of discos licences. 
It is important to protect electricity infrastructure before the implementation of Siemens and the Federal Government of Nigeria agreement for the Nigeria electrification road map. The goal of the road map is to resolve existing challenges in the power sector and expand the capacity for the future power needs of the country. 
The Power Holding Company of Nigeria, PHCN, lost equipment worth millions of naira to theft and vandalism less than two months to the January 2014 deadline for the power generation and distribution companies to start operation. Materials such as cables and wires, among others, could either been stolen or vandalised. Electricity cables, transformer winding coil, laminated cord, feeder pillar, laminating sheets must be secured before licences revocation. 
More than five years after the privatisation of the sector, the investors who took over the six generation companies and 11 Discos that emerged after the unbundling of the PHCN are still grappling with the old problems in the sector. The sector is plagued with problems of gas supply shortages, limited distribution networks, limited transmission line capacity, huge metering gap, electricity theft and high technical and commercial losses, among others. 
As the nation’s power sector remains in crisis mode, the Presidency has met with electricity distribution companies in a bid to resolve some of the issues affecting the electricity supply industry. As the clamour to revoke licenses of the buyers of the privatised power assets continues, the Electricity Generation Companies, GENCOs, have disclosed that they have increased Nigeria’s generation capacity from 12,500 megawatts, to 13,496 megawatts. 
The Federal Government may cancel the licences of eight power distribution companies as the Discos breached some provisions of the Electric Power Sector Reform Act in July 2019.  In a notice posted on its website, the power sector regulator said it intended to cancel licences issued to the eight Discos pursuant to Section 74 of the EPSR Act. 
In the eight-page notice to the Discos, which was signed by one of the NERC’s commissioners, Dafe Akpeneye, the commission stated that the power firms had 60 days to explain why their licences should not be cancelled. It said: “Take notice that pursuant to section 74 of the EPSR Act and the terms and conditions of electricity distribution licences issued to the distribution licensees by Nigerian Electricity Regulatory Commission has reasonable cause to believe that the Discos listed below have breached the provisions of EPSRA, terms and conditions of their respective distribution licences and the 2016 – 2018 Minor Review of Multi Year Tariff Order and Minimum Remittance Order for the Year 2019.” 
It identifies the Discos as: “Abuja Electricity Distribution Company Plc; Benin Electricity Distribution Company Plc; Enugu Electricity Distribution Company Plc; Ikeja Electric Plc; Kaduna Electricity Distribution Company Plc; Kano Electricity Distribution Company Plc; Port Harcourt Electricity Distribution Company Plc; and Yola Electricity Distribution Company Plc.” 
The commission said it considered the actions of the aforementioned Discos as “manifest and flagrant breaches” of EPSRA, terms and conditions of their respective distribution licences and the order. It stated that the commission “therefore requires each of them (Discos) 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.” 
Further analysis of the notice showed that the eight Discos failed to meet the expected remittance threshold for the month of July 2019 billing cycle to the Nigerian Bulk Electricity Trading company. 
The Federal Government had unbundled the Power Holding Company of Nigeria, PHCN, into 18 firms and sold them to private owners at $2.5billion (about N903.750bn) in 2013. The assets consist of six generation companies  and 11 distribution companies. “Today, the BPE confirms that most of the GENCOs have exceeded their contractual obligations. Overhaul has been successfully carried out on one of the generating units at Jebba plant. Capacity recovery process on other unavailable units continues which will enable the plants recover to full installed capacity.” 
The report noted that the privatisation of the country’s power sector had exposed the inherent structural weakness in the sector, adding that investors, GENCOs are worst hit in the electricity market logjam. It further stated: “Historical generation data for the period 1st November 2013 to 31st December, 2,018 shows that there has been 75 per cent increment in the available generation capability, amounting to about 3,169.95mw (4,214.32 in 2013 – 7,384.27MW in 2018) within this period.” 
The report, however, disclosed that investment on generation is at the instance of the off-taker (the buyer of the power generated), adding: “GENCOs were promised 100percent payment of all they are capable of generating by the government through its agency called NBET. The promise provoked some additional investments by GENCOs with its attendant high cost of capital, increased regulatory risk, increased debt profile.