Ten electricity Distribution Companies (DisCos) privatised in 2013 have declared a force majeure over the commencement of the Eligible Customer Regulation in the power sector which allows customers to buy electricity directly from Generation Companies (GenCos).
Investors of the 10 DisCos in a letter of notice to the Bureau of Public Enterprises (BPE) on Monday said they were quitting the business because of the change of law as executed by the Nigerian Electricity Regulatory Commission (NERC) which prevents them from fulfilling their obligations under the Performance Agreement they signed with the BPE.
Investors of the 11th DisCo, Yola Electricity Distribution Company (YEDC), had declared a force majeure in 2015, saying the war on terrorism was hindering them from meeting their obligations. It was accepted by BPE and the management taken over by the Federal Government.
The 10 DisCos have said the power sector, which is battling over N800 billion liquidity crisis, was not yet mature for the declaration of the new policy which could see most of the Large Power Users (LPU) exist the DisCos’ customer base.
In his response to the DisCos’ request to quit, the Director General of BPE, Mr Alex Okoh, said there was no basis for declaration of force majeure.
He challenged the DisCos’ assertion that there has been a change in law and political force majeure as it is in the Performance Agreement.
“As such, he rejected the notice to declare force majeure by the DisCos,” BPE’s spokesman, Chukwuma Nwokoh, also said in a statement.
BPE said the Electric Power Sector Reform Act (ESPRA) 2005 empowers the Minister of Power, Works and Housing to issue the policy directive which he did in May 2017, while NERC implemented it in line with the Act.
“Given that the declaration and the regulations were lawfully and validly issued by the minister and NERC, and that there has been no change in the law giving rise to a political force majeure event, we are unable to see the basis for the issuance of the notice,” Okoh also declared.
On its part, NERC, through its Commissioner, Legal, Licensing and Compliance, Mr Dafe Akpeneye, said the DisCos participated in the consultative process before the regulation was implemented and had no objection to it.
“We align ourselves with the response of the DG of BPE in this matter whereby they rejected the notification; we will have discussions with all parties,” Akpeneye added.
When contacted, the Association of Nigerian Electricity Distributors (ANED) representing the DisCos, confirmed the notice.
The spokesman, Mr Sunday Oduntan, said they are issuing a statement as a reaction to the BPE’s response.