The Federal Government announced on Monday that power distribution companies in the Nigeria Electricity Supply Industry, which are performing below stipulated standards, will experience a 50% reduction in their operating expenditures.
At the 1st NESI Stakeholders Meeting of 2024 in Lagos, the declaration was made through the Nigerian Electricity Regulatory Commission, emphasizing the need to examine the individual performances of the Discos on a case by case basis going forward.
There are officially 11 power distribution companies in Nigeria that supply electricity to over 12 million registered power users across the country.
In November 2013, the successor Discos and the power generation companies that supply electricity to the national grid were privatized.
The power produced by the Gencos is transmitted by the Transmission Company of Nigeria to the Discos for distribution to users nationwide.
However, the sector has been plagued by a series of concerns, with the issue of poor liquidity and complaints about the inability of Discos to make sufficient financial remittances to the industry to ensure power production.
According to a series of posts on the power sector regulator’s official X handle on Monday, Musiliu Useni, the Vice Chairman of NERC, urged Discos to improve their performance or else suffer the consequences.
He pointed out that the NERC will assess performance on a case by case basis and sanctions and actions will not be the same, so they should make sure to improve their efficiency.
He said, “If your efficiency is at the level expected, you will get your full OPEX (operating expenditure). If you don’t perform, you will only get 50 per cent of your admin OPEX.”
The power to approve the operating expenditures of Discos and other key operators in the industry lies with NERC, the regulator of the power sector, and it has been exercising this authority for years.
During his speech, Useni mentioned that the finance ministry was responsible for handling the operationalisation of Ministries Departments and Agencies centralised billing platform.
“A payment system was put in place for critical MDAs, with an agreement for the central settlement of their electricity consumption by the Ministry of Finance, which would have access to their meter readings,” he stated.
In terms of payment obligations by various operators, he further noted that the sector must be run sustainably.
The commission stated that the meeting was expected to provide strategic direction for the NESI, review compliance since the last meeting, and give licensees a platform to discuss issues.
During his speech at the meeting, Chidi Ike, the Commissioner, Engineering, Performance and Monitoring, NERC, emphasized the need to examine the responsibilities of licensees in the NESI.
“We are planning to organise a comprehensive workshop for licensees to examine their responsibilities. The workshop will cover the legal framework, grid code, HSE (health, safety and environment), and everything they need to know, following which there will be sanctions for non-compliance,” he stated.
Expressing concern, he warned Discos to refrain from supplying power to houses built under transmission lines.
