… orders NERC to explore innovative strategies to compel DisCos to enhance power supply
Oredola Adeola
In a significant turn of events, Chief Adebayo Adelabu, the Minister of Power, after acknowledging that revoking the license of an electricity distribution company (DisCo) falls outside his jurisdiction, has therefore shifted his position on mode of enforcing market rules, following pressure from industry advisors and consumer advocacy groups.
Chief Adelabu during a meeting with the head of the agencies in Abuja on Monday accused the DisCos of poor performance and lack of investment to improve supply despite the availability of power on the national grid.
The Power Minister has therefore instructed the Nigerian Electricity Regulatory Commission (NERC) to withdraw licenses from non-performing DisCos, expressing dissatisfaction with the poor performance and lack of investment by DisCos in enhancing power supply despite the ample availability of electricity on the national grid.
Adelabu has emphasized the need for the NERC to explore innovative strategies to compel DisCos to enhance power supply.
This, according to him, includes imposing stringent penalties on utilities that neglect their allocations and even considering the outright revocation of licenses for non-compliance.
The Minister also announced the government’s intention to pursue a restructuring plan aimed at establishing smaller DisCos, each confined to operating within a single state.
According to him, the franchise areas covered by the DisCos were too large. He added that the proposed overhaul seeks to streamline operations and improve service delivery within the electricity distribution sector.
“Distribution is our weakest point, and it is the closest to the consumers. If we don’t get distribution right, to Nigerians, we’re not doing anything. So, efforts need to be put on this. In fact, we must intensify our efforts in ensuring that we address all issues relating to distribution.
“It is true that the distribution companies are in the hands of the private sector. We don’t have direct control. But we need to compel them for performance. They must perform.
“If they do not perform, all our effort in generation, in transmission is zero. I’ve also had a meeting with the Chairman of NERC on how we’re going to address these performance issues of the electricity distribution companies across the nation.
“While we have new policies in our power sector policy framework, which we’re going to finalize to address long-term issues in distribution, we must proffer short-term solutions to the lingering crisis. Before we get to that, we’re talking about the issue of the capitalization of the discourse, for them to inject funds, to improve infrastructure.
“We are talking about issues of restructuring the DisCos along state lines, to make them manageable in size. Also, issuing new franchises to smaller DisCos to take over areas not being served by the existing ones or that have been underserved by the existing ones.
“I’ve said it before now that nonperformance of DisCos in terms of epileptic power supply qualifies as a basis for revocation of license. Any DisCo that is found-wanting will be severely dealt with because their actions or inactions directly affect the performance of the sector,” Adelabu said.
The Minister underscored the critical need for DisCos to promptly utilize available power allocations, highlighting that any willful refusal to do so could warrant the revocation of licenses.
He emphasized that distribution companies must be prepared to handle between 90-99 percent of the load allocated to them.
Additionally, he condemned the ongoing electricity rationing nationwide as unacceptable and revealed the government’s ambitious plan to boost power generation from the current 4,000MW to 6,000MW within the next six months.
To achieve this target, the Minister outlined a strategy that involves settling substantial debts owed to power generation companies and gas suppliers.
Adelabu expressed confidence in the country’s capacity to generate up to 6,500MW with improved gas supply stability.
The Power Minister stressed the importance of addressing distribution challenges and ensuring that DisCos perform optimally to enhance the overall efficiency of the power sector.
Energy industry experts, as highlighted in a recent report published by the Advisors Reports, raised concerns over the Power Minister’s threats of license revocation, cautioning against potential negative impacts on the power sector.
These experts advocate for strategic actions over reactive measures to achieve sustainable improvements in power supply and distribution.
AbdulWasiu Esuola, an Energy and Corporate Lawyer, emphasized the importance of the Minister focusing on policy direction while allowing NERC to regulate the industry effectively.
He stressed the need for collaboration to leverage the benefits of decentralization in the power industry as outlined in recent electricity acts.
Adetayo Adegbemle, Executive Director of PowerUp Nigeria, underlined the significance of the Power Minister understanding the industry’s challenges and seeking informed advice before making policy decisions.
He urged a shift towards addressing critical issues within power transmission and metering sectors for immediate gains.
Emeka Ojoko from NEPA Wahala echoed concerns about political-driven decisions impacting industry stability, emphasizing the necessity for structural reforms to enhance competition, efficiency, and profitability within the Nigerian Electricity Supply Industry.
