The Nation Newspaper

Tag: NERC

  • Reform too early to be assessed, says MAN

    Reform too early to be assessed, says MAN

    It is too early to assess the power sector reform, the Manufacturers Association of Nigeria (MAN), has said

    Its Chairman, Infrastructure Committee, Reginald Odiah, told The Nation that the body wants to observe the unfolding situation before passing judgment on issues relating to the power sector reforms.

    He said: “As regard the issue of privatisation of the Power Holding Company of Nigeria (PHCN), it is a good development in the history of Nigeria’s energy sector. The idea is aimed at repositioning the sector for growth to enable it compete with others in the emerging economies.

    “Though we believe that the National Electricity Regulatory Commission (NERC) is competent to regulate the sector and further make it work, we are still studying the situation. We want to see how the whole thing plays out before stating our position on the matter.”

    Odiah said the body presently generates about 550 megawatts (Mw) of power in the three out of its eight delineated industrial clusters.

    He said the association grouped the country into eight industrial clusters, out of which three were picked for the location of power plants after careful appraisal of developments. He said the three clusters located in Ota/Abeokuta axis of Ogun State have functional power plants, adding that the Ota/Abeokuta axis was chosen because of its relatively huge concentration of industries.

    “We are looking at areas with high concentration of industries and after necessary investigations, we arrived at a decision to choose Ota/ Abeokuta axis. Besides, we discovered that the cost implication of having power plants in the area is not much compared to others.  In the three industrial clusters located in the Ota/ Abeokuta axis, we have three power plants with an output of 550Mw,” he added.

  • Make remittances or pay fine, NERC orders DISCos

    Make remittances or pay fine, NERC orders DISCos

    Nigerian Electricity Regulatory Commission (NERC) has read the riot act to electricity distribution companies (DISCos), requesting them to transfer November last year’s opening cash and bank balances to the Nigeria Electricity Liability Management Company (NELCOM), remit deducted Value Added  Tax (VAT) to the Federal Inland Revenue Service (FIRS)   or  pay fine  of N10,000 per hour from October 17.

    It would be recalled that aside Kaduna DISCo, the private owners who took over the successor companies on November 1, last year met some balances which NERC in the audit on the financial expenditures of the DISCos referred to as opening cash balance as at 1st November this year. NERC is seeking the transfer of the fund to the NELMCOM that manages the assets and liabilities of the defunct Power Holding Company of Nigeria (PHCN).

    The Nation yesterday obtained the audit report in Abuja.

    In a letter dated October 8,  NERC Chairman, Dr. Sam Amadi expressed dissatisfaction with most of the expenditures and non-remittances of VAT to the FIRS.

    Titled:  Re: Open Book Review of Accounting/Financial Records for the Period of 1st November 2013 to 31st July 2014, it explained that the audit was conducted to ascertain compliance with the Rules for the Interim Period as amended in April  this year and appropriateness of the expenditures embarked upon during the period under review.

    Amadi ordered that “Abuja DISCo  should immediately effect transfer of about N4,436,527,763 accrued interest of 13 per cent per annum with effect from December 1, 2013 to NELMCO being available cash/bank balances as at 31st October 2013.

    “Evidence of remittance should be made available to the Commission on or before the close of business on Friday, 17th of October. Please be advised that failure to comply with the commission’s resolution shall attract a fine of N10,000 for every hour until eventual payment.”

    He also asked the Abuja Disco to “immediately effect transfer of N753,237,761.60 plus accrued interest at 13 per cent per annum with effect from 1st December 2013 to NELMCO/MO in respect of outstanding 80 per cent October 2013 receivables collected in November in line with the Pre-Transaction Completion Agreement.

    “Evidence of remittance should be made available to the commission on or before the close of business on Friday, 17the October, 2014.

    “Please be advised that failure to comply with the Commission’s resolution shall attract a fine of N10,000 for every hour.”

    In terms of un-remitted VAT, the chairman ordered that “Abuja DISCo should immediately effect remittance of N168,976,498.95 to the Federal Inland Revenue Service (FIRS) being unremitted VAT collections in respect of sale of electricity to consumers as of June 2014 and subsequent remittances of VAT collections for the period of July – September 2014.

    “Subsequently, VAT collection shall henceforth be treated as first charge and remitted along with remittances of the Market Operations. Evidence of remittance should be made available to the commission on or before the close of business on Friday 17th October 2014. Please be advised that failure to comply with the commission’s resolution shall attract a fine of N10,000 for every hour until eventual payment.”

  • NERC: we’re ready for transition electricity market

    NERC: we’re ready for transition electricity market

    The Nigeria Electricity Regulatory Commission (NERC) yesterday said it was ready to start the Transition Electricity Market (TEM).

    Its chairman, Dr. Sam Amadi, spoke in Abuja at the inauguration of the dispute resolution panel.

    Amadi said the commission had completed the last of the formal conditions precedent (CP) and would recommend to the Minister of Power to declare the beginning of the TEM.

    The commission, the chairman said, would soon notify the minister to make the declaration.

    He said: “Now that we have completed the last of the formal conditions precedent and we are effectively handling the formal conditions precedent, NERC is poised to recommend to the minister to declare the commencement of the Transition Electricity Market at a named date.

    “In the days ahead, we will notify the Minister of Power to make such a declaration. We are confident that the Nigerian electricity market is ready to successfully enter the transitional stage.”

    Addressing reporters, Amadi said TEM “simply means people are trading by their contract”.

    The chairman said the commission had met the condition precedent for the commencement of TEM, as prescribed by the market rules.

    He recalled that in 2011, NERC established an industry-wide Transition Steering Group (TSG) to manage the efforts of stakeholders in the electricity industry to achieve the conditions precedent to the commencement of TEM.

    Amadi explained that the Electric Power Sector Reform Act, 2005 requires that the market would enter into a transitional stage before the beginning of full competitive electricity market

    He said the significance of the market is that participants would begin full trading by contract.

    At such a stage of the market, said Amadi, institutional and normative structures of a competitive and efficient electricity market would be established.

    He explained that for the stage of the market to succeed, certain formal and informal conditions precedent (CPs) need to be met.

    Amadi said: “The formal CPs include the approval of grid codes and market rules, the establishment of an independent regulator, a market operator and a system operator with functional capabilities and the establishment of a market dispute resolution mechanism.”

     

    Amadi said that yesterday marked the formal completion of CPs, noting that NERC recognises that there are some informal CPs not listed in the Market Rules but necessary for the optimal working of the market.

    According to him, “these include a fully cost reflective tariff, confirmation of reliable supply of gas to power plants and validation of gas supply and power purchase agreements.

    “The concerted efforts by the NERC, CBN, the Ministry of Power and Ministry of Petroleum Resources to deal with the legacy debt and revenue shortfalls in a sustainable manner are focused on dealing with informal non-Market-Rules CPs. We are confident that our efforts are effectively addressing these issues.”

     

  • Kwankwaso, NERC, TCN chiefs for WorldStage confab

    Kwankwaso, NERC, TCN chiefs for WorldStage confab

    KANO State Rabiu Musa Kwankwaso, Chairman, Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi, and Managing Director of Transmission Company of Nigeria (TCN), Mr. Mack Kast, among others, have confirmed participation in the fourth WorldStage National Electricity Power Conference.

    According to the organisers of the conference, the event has been rescheduled to hold on October 23, from the September date earlier announced. But the venue remains Lagoon Restaurant, Victoria Island, Lagos. The date was shifted to accommodate more requests for participation.

    The event will be chaired by President of Lagos Chamber of Commerce and Industry (LCCL), Alhaji Aderemi Ismaila Bello; Amadi is expected to deliver a paper titled: ‘Commitment of NERC towards regulation and effective consumer’s right on electricity supply chain’  and the TCN boss will speak on ‘TCN: Meeting the electricity transmission capacity for Nigeria post-privatisation.’

    Governor Kwankwaso, whose state has achieved commendable progress in power generation through independent power projects (IPPs) for economic development, will share his experience with participants at the forum.

    The President/Chief Executive Officer, World Stage Limited, Mr. Segun Adeleye, said with about 30 million households in Nigeria still without access to electricity even liberalised electricity power sector, it is crucial for stakeholders to meet to address the challenges facing the power sector.

    He said: “The challenges that surfaced with the new dispensation are numerous but not un-surmountable.” He listed these to include the rising activities of vandals who burst gas pipelines and other power transmission equipment; high level of power theft and meter bypassing; gas supply limitation; revenue collection; transmission wheeling capacity; funding model for transmission; expected declaration of Transition Electricity Market; lack of accurate data on power demand of the entire country; non-alignment of the entire value chain of power generation, transmission and distribution; security of investment; right pricing and efficient usage of available electricity; paucity of fund for transmission facility upgrade and replacement of aging 132KV lines.

    “As banks invested about N750 billion in the power sector since its privatisation, it’s imperative that the security of this huge exposure rests squarely on stakeholders to ensure success of the privatisation process,” he said.

  • NERC ties new electricity tariff to meter availability

    NERC ties new electricity tariff to meter availability

    The Chairman, Nigeria Electricity Regulatory Commission (NERC), Dr. Sam Amadi, has said the implementation of the new electricity tariff expected to begin on December 1, may depend on the provision of meters to consumers.

    He said interim metering policy introduced by NERC named Credit Advance Payment for Metering Implementation (CAPMI) did not yield the expected result because the electricity distribution companies (DISCos) kicked against it.

    Amadi, who spoke to reporters in Abuja, said the distribution companies (DISCOs) complained about the policy, saying that their personnel cost increased following the payment of 50 per cent severance package to labour.

    “CAPMI has not really yielded the optimum result because DISCOs said their personnel cost went up because of the issue of labour where they had to pay 50 per cent, so they don’t have money,” he said.

    He recalled that under the old Multi-Year Tariff Order (MYTO), the DISCOs were expected to provide meters in 18 months, which did not work out before the commission introduced the CAPMI for customers to pay for meters and get repayment through energy credit.

    He said though the policy did not work, the new review would be clear on metering. Amadi said upon the release of the N213 billion power sector intervention fund, the commission would table the business plan of the DISCos and the commitment they made as a benchmark.

    The NERC boss said the fund was not for future intervention, stressing that it covers the period when the new owners took over the entities on November 1, last year to November 1, this year. He noted that the new operators must indicate the actual losses and the improvement they have made in their operations.

    He said: “We will expect that DISCos will come out full swing and roll out meters not on CAPMI basis but on their normal metering plan. And with this new fund coming in, we will give mandate that the action starts quickly.

    “There are many options and we are still discussing. We might make the new tariff contingent for a few months on clearly delivered metering settlement. This is because the biggest let down in this market today is lack of meters and scarcity of energy.

    “There is scarcity of energy because of lack of gas, lack of robust metering coupled with revenue shortfall. This has made it difficult to force the DISCos to meet their business plan, which includes metering.

    “And don’t forget that the business plans that these new owners used to secure these assets have clear commitment on metering. So our job is to bring up those commitments and sign off with them and use it as a benchmark.”

  • Kwankwaso, NERC, TCN chiefs for WorldStage confab

    KANO State Rabiu Musa Kwankwaso, Chairman, Nigerian Electricity Regulatory Commission (NERC), c, and Managing Director of Transmission Company of Nigeria (TCN), Mr. Mack Kast, among others, have confirmed participation in the fourth WorldStage National Electricity Power Conference.

    According to the organisers of the conference, the event has been rescheduled to hold on October 23, from the September date earlier announced. But the venue remains Lagoon Restaurant, Victoria Island, Lagos. The date was shifted to accommodate more requests for participation.

    The event will be chaired by President of Lagos Chamber of Commerce and Industry (LCCL), Alhaji Aderemi Ismaila Bello; Amadi is expected to deliver a paper titled: ‘Commitment of NERC towards regulation and effective consumer’s right on electricity supply chain’  and the TCN boss will speak on ‘TCN: Meeting the electricity transmission capacity for Nigeria post-privatisation.’

    Governor Kwankwaso, whose state has achieved commendable progress in power generation through independent power projects (IPPs) for economic development, will share his experience with participants at the forum.

    The President/Chief Executive Officer, World Stage Limited, Mr. Segun Adeleye, said with about 30 million households in Nigeria still without access to electricity even liberalised electricity power sector, it is crucial for stakeholders to meet to address the challenges facing the power sector.

    He said: “The challenges that surfaced with the new dispensation are numerous but not un-surmountable.” He listed these to include the rising activities of vandals who burst gas pipelines and other power transmission equipment; high level of power theft and meter bypassing; gas supply limitation; revenue collection; transmission wheeling capacity; funding model for transmission; expected declaration of Transition Electricity Market; lack of accurate data on power demand of the entire country; non-alignment of the entire value chain of power generation, transmission and distribution; security of investment; right pricing and efficient usage of available electricity; paucity of fund for transmission facility upgrade and replacement of aging 132KV lines.

    “As banks invested about N750 billion in the power sector since its privatisation, it’s imperative that the security of this huge exposure rests squarely on stakeholders to ensure success of the privatisation process,” he said.

  • NERC seeks autonomy for market operators

    NERC seeks autonomy for market operators

    • Govt to unbundle TCN during transition market

    The Nigeria Electricity Regulatory Commission (NERC) is canvassing for the removal of the Market Operator (MO) and System Operator (SO) as units in the Transmission Company of Nigeria (TCN).

    According to NERC, the market operators deserve autonomy to function properly.

    NERC’s General Manager, Marketing and Rates, Abdulkadir  Shetima who made a presentation on the Transition Electricity Market (TEM) in a capacity building workshop for energy correspondents at the weekend in Abuja, argued that the operators require independence from the TCN.

    He said: “There is no independence of MO and SO. They seek approvals from the TCN. We have issued licenses to TCN to unbundle them and that will be done during TEM.”

    Under the present Electricity Power Sector Reform Act 2005, the TCN is run through a management contract by the Minitoba Hydro International of Canada.

    According to him, besides inadequate generation capacity, there is currently lack of clarity in electricity contracting framework.

    He lamented that inadequate tariff contributes to distribution companies (DISCOs) inability to meet their obligations.

    Shetima said shadow trading has become necessary in order to identify any errors and gaps to enable resolution ahead of TEM “in the next couple of months.”

    He submitted that before the TEM, there must be a cost reflective tariff for the industry and adequate securitisation arrangements must also be put in place.

    The General Manager argued that there should be effective monitoring of licenses particularly TCN and DISCOs to ensure minimisation of losses and improvement in customer service delivery.

    But Shetima, who presented the analysis of shadow trading of the TEM since September 1, said “all trading arrangement during TEM will be consummated through contracts. The MO shall develop a market procedure for the management of inadequate supply and shortage conditions. The commission will constitute the initial market surveillance panel.”

    According to him, all the conditions precedent to the declaration of TEM have been attained in the Nigeria Electricity Supply Industry (NESI) except the formalisation of the trading arrangements (vesting contracts) between participating companies, which is now in process.

    Shettima said  the development, implementation and testing by the SO of the systems and procedures required to implement the grid codes is also still in process.

    The General Manager explained that at the moment, NESI has attained 100 per cent metering at the wholesale point.

    Shettima also said the law on the privatisation of the electricity DISCOs  and electricity generation companies (GENCOs) stipulates that no company shall hold more than one DISCO or GENCO.

    The law, he said, states that no particular company shall hold more than 30 to 40 per cent of the shares in the electricity market in order to avoid monopoly.

  • CBN plans 10-year bailout for GENCOs, DISCOs

    CBN plans 10-year bailout for GENCOs, DISCOs

    The Central Bank of Nigeria is planning a 10-year bailout for the electricity distribution and generation companies otherwise known as GENCOs and DISCOs.

    The Chairman of the Nigeria Electricity Regulatory Commission (NERC), Dr. Sam Amadi, told Energy correspondents at a capacity building workshop in Abuja, Friday, that the commission will work out the amount of the facility later on Friday.

    He explained that the idea is to create a fund in place of the present revenue shortfall in the companies’ operations without inconveniencing the consumers.

    The NERC chairman said, “The CBN fund gives opportunity for DISCOs and GENCOs to have this money on time right now and then repay it over 10 years. They are giving us 10 years instead of five which reduces the amount that the consumers will pay. They have given us a 10 -year facility so to say.”

    His words: “But the key issue is the revenue shortfall in the market. We are arranging with the Central Bank of Nigeria to create a fund to cover the shortfalls without necessarily inconveniencing the consumers. It will be spread over 10 years. It gives the operators the opportunity to make quick investments and quick returns in terms of services.”

     

  • Needless feud between NERC and EMSL

    SIR: The acrimonious relationship between the Nigerian Electricity Regulatory Commission (NERC) and the Electricity Management Services Limited (EMSL) is indeed unfortunate, a needles rivalry between sister agencies. Nigerians got wind of it at the public hearing on the Bill for the establishment of the Nigerian Electricity Management Services Authority (NEMSA) organised by the House of Representatives Committee on Power on Wednesday, July 16. The Bill seeks to grant EMSL the authority to enforce Technical and Safety Standards, Inspection, Testing and Certification in the Nigerian Electricity Supply Industry among numerous other mandates.

    Those who couched the draft bill must have relied on the transfer of the duties and responsibilities of Electrical Inspectorate Services (EIS) of the Federal Ministry of Power to EMSL. The initiators of the bill, Senator Phillip Aduda and Hon. Patrick A. Ikhariale believes that the strengthening of enforcement, standards, safety and certification of operations in the sector, hitherto performed by a mere department in the ministry of power, ought to devolve to a new agency created by law.

    This view is not shared by the Nigerian Electricity Regulatory Commission (NERC) which sees the bill as derogating from its sole duties of regulating the power sector.  It contended that the bill would be at complete variance with the ESPR Act 2005.

    The two agencies should be mindful of the ripple effect this war of words would create on the psyche of potential investors in the power sector. The clash and struggle for responsibilities is uncalled for at the moment. The public war of words should not undermine the essence of the power sector reforms which established the two agencies in the first place. Both were established to work in synergy, cooperation and unrestricted interface to further the interest of the sector. In fact, only robust collaborative effort and positive interface can speed up attainments of the goals of the power sector reforms.

    The blame for the ruckus should be placed at the door steps of the National Assembly. The National Assembly ought to have done its home work on the bill to remove possible areas of conflict and overlap. One expected the National Assembly to be at home with previous laws they passed and the limit of their operations.

     

    • Sunday Onyemaechi Eze

    Samaru, Zaria

     

  • NERC creates dispute resolution mechanism for electricity industry

    NERC creates dispute resolution mechanism for electricity industry

    The Nigerian Electricity Regulatory Commission (NERC)  has established a dispute resolution mechanism for the settlement of disputes in the electricity industry.

    The regulator said it has taken the step ahead of the expected evolution of the Nigerian Electricity Supply Industry (NESI).

    It added that it is to attain a steady state operations in a contracts and rules-based electricity trading market.

    Its  Head, Public Affairs Department , Dr. Usman Abba Arabi, in a statement yesterday recalled that early this year, the Commission appointed Dr. Mamman Lawan, an academic from the Bayero University, Kano, to serve as a Dispute Resolution Counsellor (DRC) for the industry.

    One of the DRC’s key responsibilities, under the Electricity Market Rules, is to advise the Nigerian Electricity Regulatory Commission (NERC) on the appointment of members of the Dispute Resolution Panel (DRP) and thereafter, to assign members of the DRP to undertake the resolution of such disputes that may arise from time to time among Market Participants in the NESI.

    NERC said in accordance with the Electricity Market Rules, Dr. Lawan recently nominated to the Commission 20 individuals who had gone through an application and vetting process, for appointment to the DRP.

    The commission added that following due consideration, it approved the appointment of 12 persons out of 20, to constitute the NESI’s very first Dispute Resolution Panel.

    The statement reads in part: “These persons are all professionals, most of whom also have alternative dispute resolution qualifications and experience.

    “They include  engineers, economists and legal practitioners, namely Nnenna Ahakannah, Ejekam Nnenna, Adeyemi Oyedele, Hussani Mohammed, Boma Ozobia, Adeyemi Akinsanya, Tamuno George, Sadiku Folorunsho, Olufunmi Roberts, Okechuckwu Joseph Chiazor, Ezekiel Osarieme and Augustine Mamadu

    “As required by the Market Rules, the DRP shall have responsibility for the resolution of disputes that arise out of the operations of the Market Rules and the Grid Code between and amongst Market Participants in the NESI. These Market Participants are specifically the Distribution Companies (Discos), Generating Companies (Gencos), the System Operator, the Market Operator and the Transmission Service Provider.”

    “All Market Participants are also licensed by NERC to build, operate and maintain facilities for the provision of electricity services of various kinds in Nigeria. The DRP will also resolve disputes between the Market Operator and any person who has been denied certification by the Market Operator as a Participant in the NESI.

    A date for the inauguration of the panel will be announced in due course.”