By Milcah Tanimu
The Federal Government announced plans to impose strict measures on power distribution companies (Discos) performing below the expected standards within the Nigeria Electricity Supply Industry (NESI). At the 1st NESI Stakeholders Meeting of 2024 in Lagos, the Nigerian Electricity Regulatory Commission (NERC) revealed that underperforming Discos could face a significant reduction of 50% in their operating expenditures.
Nigeria currently has 11 power distribution companies responsible for supplying electricity to over 12 million registered users nationwide. Despite the privatization of these companies in November 2013, the sector continues to face challenges such as poor liquidity and inadequate financial remittances by Discos to ensure uninterrupted power production.
Musiliu Useni, Vice Chairman of NERC, emphasized that Discos must enhance their operational efficiency to avoid sanctions. He clarified that NERC would assess each Disco’s performance individually, and sanctions would vary accordingly. Discos meeting efficiency expectations would receive full operating expenditure, while underperforming ones would only receive 50% of their administrative operating expenditure.
NERC, responsible for regulating the power sector, has the authority to approve the operating expenditures of Discos and other industry operators. It also oversees the implementation of payment obligations by various stakeholders to ensure sustainability within the sector.
Regarding the centralization of billing platforms for Ministries, Departments, and Agencies (MDAs), Useni stated that the finance ministry was overseeing the operationalization process. He stressed the importance of adhering to market rules and ensuring sustainable payment practices without relying on tariff shortfalls or subsidies.
Chidi Ike, NERC Commissioner for Engineering, Performance, and Monitoring, highlighted plans to organize workshops for licensees to understand their responsibilities better. Non-compliance could lead to sanctions, including penalties for supplying power to structures built under transmission lines, which contravene TCN’s Right of Way.
John Joseph, Assistant General Manager at NERC, addressed safety concerns within NESI, identifying unsafe conditions as a leading cause of accidents in 2023. He emphasized the importance of adhering to safety guidelines to prevent accidents and ensure the well-being of workers and the public.