NERC to revoke licences of non-performing electricity firms

• Okays solar, thermal generation
• Presidency unveils gas-to-power plans 

THE Nigerian Electricity Regulatory Commission (NERC) yesterday announced that it has commenced revoking many of the generation licences that it issued which are ‘non-performing.’

The commission, which reviewed the status of the 120 licences issued since 2006, noted that government had since resolved some of the complaints of the licensees by establishing the Nigerian Bulk Electricity Trading Company (NBET or Bulk Trader) to act as the off taker for the sector.

Also, the Presidency has pledged to garner the necessary investments to improve the wheeling capacity of the nation’s transmission infrastructure.

Vice President, Yemi Osinbajo, who made the pledge, stressed how the new government would focus attention on improving the supply of gas to power plants, which will ensure sufficient gas supply. This, he hopes, would help maximize 13,000mw of generating capacity immediately.

Despite lamenting that many of the licences were yet to move from being mere papers to mega watts of electricity, NERC yesterday in Abuja issued fresh generation licences to four firms with total generation targets of 774 mega watts of electricity.

In issuing the fresh licences, NERC said it had extracted concrete commitments from the promoters of the four benefitting firms to produce power or be sanctioned.

The licences were issued to Nigeria Solar Capital Partners Limited for a 100MW solar-powered IPP at Ganjuwa, Bauchi State; Proton Energy Limited for a 150MW IPP at Ogorode, Sapele, Delta State; Turbine Drives Limited for 500MW IPP at Ajaokuta, Kogi State; and Pan Africa Limited for a 24MW solar-powered IPP at Kankia, Katsina State.

The commission warned beneficiaries of the licences that it would move from its initial ‘lenient’ position with licensees to evoking the relevant provisions of the Electric Power Sector Reform Act (EPSR) to revoke any non-performing licence after an ongoing technical evaluation of the licences.

NERC Chairman, Sam Amadi who announced the revocation of licences noted: “I want to reassure everybody that NERC over the years has built a reputation of consistent rule making and honest application of rules. We can pride ourselves probably as the most transparent agency in this country.

We will continue in the practice of openness, transparency and consultation by following the rules.’’ He said the four new licences had promised to deliver on the terms of their licences.

He stressed: “The major plight of consumers is that they have shorter hours of supply. That is because we have very bigger, mega watts in the grid. By now it should be very obvious to everybody that if you have mega watts, you will get more supply, all things being equal.

In the run up to the inauguration, things were very bad across the country. A place like Abuja was getting only 11mws, because of the strike and the usual issue about vandalism. But a few days after the strike was called off, it ramped up, and Abuja started getting 15-MWs to 200MWs.

The ratio between the amount of power available to the grid and what consumers experience is very clear. It is different relationship. “These new licencees are here pledging to develop new power, different amounts of mega watts to the grid. That is really solving the customers’ problem.

If we were a 10, 000mws market, the experience of consumers will be different. ‘‘There is no hide and seek about it. The commission by law is mandated to guarantee cost reflective tariff. And that is one sure pathway to ensuring supply.

So, the idea of sustainability is also about sustaining quality power supply. We are addressing the plight of consumers by ensuring that we have more mega watts, and these mega watts fairly and reliably distributed to every home and business.”

Commissioner in Charge of Engineering Standards and Safety, Dr. Abba Ibrahim, stressed that the commission would follow the process of revoking non-performing licences through and would spare nobody.

He explained further: “Each licence is accompanied with terms and conditions that must be achieved within certain time limits. If those milestones are not achieved, then the licences are subject to review.

‘‘After the review, if the commission is not satisfied that the licensee is able to proceed to deliver the project and the mega watts required from that project, then we have to revoke that licence. ‘‘The commission had come out with a competitive bulk procurement framework for power.

That framework, which will involve the Bulk Trader, the System Operator, and some other key stakeholders, is aimed at bringing in efficiency in the licensing and delivery of power projects in Nigeria. It is a global best practice..” He went on: “The Commission no longer accepts unsolicited applications.

However, there are several exceptions for unsolicited applications. We are trying to promote renewable, so we have made exceptions for renewables in Nigeria. Coal is also exempted because of government policy to promote clean coal technology. Same with hydros. UNIDO has done some service. There are over 100 sites for potential hydro projects.”

Commissioner in charge of Legal, Licensing and Enforcement at NERC, Steven Andzenge buttressed the essence of the planned revocation of inactive licences. He stressed: “Every licence has key performance indicator that they are required to achieve.

It is expected that within three years of issuing the licence, substantial steps would have been taken to reach financial closure or at least construction would have commenced or even commissioned the project.

We started issuing generation licences since 2006. Most of them have not moved beyond the issuance of licences. In the past there were complaints that they had problems negotiating power purchase agreements, because there was no off taker.”

A statement yesterday from the Office of the Vice President and signed by Mfon Udott quoted Osinbajo as making the commitments at the 10th Year Anniversary Lecture of Crescent University, Abeokuta. The statement noted: “The Buhari administration has identified the weak transmission grid, which prevents the wheeling of more than 5,000MW as a gridlock to be removed; while it will work with the distribution companies to ensure the necessary investment to get electricity to consumers is in place.”

According to the Vice President: “The APC manifesto is to deliver a minimum of 10% GDP growth annually, while ensuring an inclusive economy that improves the lives of all Nigerians.

This cannot happen unless we achieve a significant improvement in the power sector. The plans for the power sector will be supported with a National Infrastructural Master Plan that requires an investment of three trillion dollars over a thirty-year period. This is the minimal requirement to improve our infrastructure stock from 35% of GDP to the benchmark for our peers, which is estimated at 70% of GDP.

“Apart from enabling manufacturing and other sectors, we expect that the investment in infrastructure will also directly create thousands of jobs in construction and maintenance activities.”

He noted that Nigeria has sixth largest gas reserves and eighth largest crude oil reserves in the world, but struggling with high unemployment and low industrialisation.

He said: “This embarrassment is compounded by the recurring scarcity of refined petroleum products which deal goes further still to harm our economy. Also corruption and a lack of transparency have dealt a massive blow on the petroleum industry thereby depleting our resources and creating a business environment which repels serious minded investors, whether locally based or international.”